BOI Guiding Star- Anniversary Issue by Sartaj Mohd Shakeel

Contents

Anniversary Special Issue 2015

EDITORIAL

Smt. V. R. Iyer Chairperson & Managing Director Bank of India

The Anniversary & Looking Forward

NATION & ECONOMY

Ensure effective conversion of bioresources into jobs and income

India to emerge as the world’s fastest growing major economy in two years

MEET

MONEY & BANKING

Face Of The New Indian Business Era Dr. Raghuram Rajan Governor, RBI

The Improvement in Business Confidence is Visible

PERSPECTIVE

STARWAY

Vol.1 No.2

SPECIAL ARTICLE Dr. C. Rangarajan Former Chairman, Economic Advisory Council to the PM

Innovation & invention are key tools to achieve higher growth

HIGHLIGHT FEATURE

Guruspeak

Dr. Prakash G. Apte Economist Industry To Be More Sustainable To Competition

PROFILE

IT INDUSTRY

Indian IT Poised for a New Growth Push

Shri K.V. Kamath Chairman, ICICI Bank The scale of Opportunity will Dramatically Change

Special Interview

Dr. Soumya Kanti Ghosh Chief Economic Advisor, SBI India’s Growth Prospects & Connecting Rightly With Future Opportunities

Agro Future

S. S. MUNDRA Deputy Governor, RBI Financial Inclusion: Visualizing Stage Next

Bank of India continues to move forward under key Parameters of performance

Mukesh Ambani

Dr. M.S. Swaminathan Chairman, M S Swaminathan Research Foundation

STAR SHOW

MARKETING MIRROR

Photo Feature

Revealing True Colours

HINDI FEATURE

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My best wishes to the readers of ‘GUIDING STAR’ in the delightful backdrop of the Magazine's First Anniversary. Vol.2 No.1 BOI

THE ANNIVERSARY & LOOKING FORWARD

know one year is just a tiny leaf in the time tree. But, still it makes a beautiful landmark when it comes to the First Anniversary of an institutional Magazine like ‘BOI GUIDING STAR’. The ‘GUIDING STAR’ Magazine project from Bank of India is, in fact, an experimental corporate communication venture. What makes the ‘BOI GUIDING STAR’ Project different and overwhelmingly successful is the concept behind this publication Project. Unlike the routine corporate PR publications, it is conceived as a ‘knowledge medium’. Through the ‘GUIDING STAR’ Magazine we wanted to present ‘something special’- a value addition from the Bank with a view to regularly reach out to the elite community, business executives, bankers and thought leaders in different spheres. It is indeed a challenge to make the concept work constantly. The editorial policy is carefully knit to have special focus on topical and relevant coverage on key issues in economy, growth, industry, agriculture, banking, technology and the social sector involving India’s some of the distinguished personalities. It gives me immense satisfaction that ‘GUIDING STAR’ Project moves on well true to our expectations. This is evident from the appreciations and feedback I receive. In this connection, I am happy to mention here that ‘GUIDING STAR’ received meritorious Awards for excellence from the prestigious organizations like PR Society of India and the Association of Business Communicator of India (ABCI). Receiving two Awards in the very first year speaks for itself. Going by the track record of the first year journey of the Project, I am very much confident that the Magazine has the right conceptual and production backing and it is sure to emerge as a prestigious knowledge channel for Bank of India, setting new patterns in corporate communications. The Anniversary Special has a good mix of appealing features. The highlight feature on ‘Connecting Rightly with Future Opportunities’ is a timely discussion and sure to attract the attention of the readers. I am very much grateful to the eminent personalities for their valuable participation in our special coverage. The Issue also has regular features. My best wishes to the readers of ‘GUIDING STAR’ in the delightful backdrop of the Magazine's First Anniversary. With Season’s Greetings,

Smt. V. R. Iyer Chairperson & Managing Director

A Corporate Thought Magazine From Bank of India

Smt. Vijayalakshmi R. Iyer Chairperson & Managing Director

Executive Directors: Shri B. P. Sharma Shri Arun Shrivastava Shri Ravindra P. Marathe

Editorial Board Shri R. C. Baliarsingh General Manager (Retail Assets, Publicity & CSR) Shri B. V. Upadhye General Manager (RMD)

Editor Shri S. M. Shakeel

Content Management & Production: BankipediaIndia Research Foundation

Editorial Director V. Gopalan

Design & Visual Effects la Gopa

Editorial Office: BankipediaIndia Research Foundation, ‘Sri Krishna’ 24/18, Sankarlal Jain Street, Nehru Nagar, Chromepet, Chennai 600044 Telefax: 044-22235248 Mobile: 9840028716 email: editorguidingstar@gmail.com

Growth Prospects

NATION & ECONOMY

INDIA TO EMERGE AS THE WORLD’S FASTEST GROWING MAJOR ECONOMY IN TWO YEARS The recent World Bank report made a significant prediction by saying that India is on course to overtake China to claim the position as the world’s fastest growing, big economy in the next two years.

he recently released World Bank’s Global Economic Prospects report 2014-15 has revised down its global growth forecast for this year to 3 per cent from its view of 3.4 per cent growth in June last year, but has bet on India to emerge as the world’s fastest growing major economy in two years, on the back of the structural reforms kicked off by the new Indian government. World Bank Group President Jim Yong Kim’s observations in this regard is significant: "In this uncertain economic environment, developing countries need to judiciously deploy their resources to support social programs with a laser-like focus on the poor and undertake structural reforms that invest in people. It's also critical for countries to remove any unnecessary roadblocks for private sector investment. The private sector is by far the greatest source of jobs and that can lift hundreds of millions of people out of poverty." The World Bank noted the global economy is facing downside risks such as persistently weak global trade, the possibility of financial market volatility as interest rates in major economies rise on varying timelines, the impact on the balance sheets of oilproducing countries due to lower oil prices and the possibility of a prolonged period of stagnation or deflation in the Euro Area or Japan.

The services sector remains the primary growth engine of the Indian economy, accounting for more than half of GDP 2

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The Report further pin points that “Risks to the global economy are considerable. Countries with relatively more credible policy frameworks and reform-oriented governments will be in a better position to navigate the challenges of 2015”. The Report made a significant prediction by saying that India is on

course to overtake China to claim the position as the world’s fastest growing, big economy in the next two years. The forecast for India, insists growth in Asia’s third-largest economy would accelerate in the coming years even as much of the world is slowing down. The reason? The new Indian Government is implementing changes that will make the country’s economy more efficient and vibrant. The Chief author of the Report " World Bank Chief Economist and Senior Vice-President Kaushik Basu predicted on the strength of his analysis that India will catch up with China's growth in the year 2016 and 2017." This is the first time in recent past that India's growth rate has been predicted to catch up with that of China. The World Bank estimated a growth rate of 5.6 percent in 2014 and has forecast a growth rate of 6.4 percent in 2015, while that of China as 7.4 (estimated) in 2014 and 7.1 per cent (forecast) in 2015. In its report the Bank said growth in South Asia rose to an estimated 5.5 percent in 2014 from a 10-year low of 4.9 percent in 2013.The Report added that "The upturn was driven by India, the region's largest economy, which emerged from two years of modest growth." The Washington-based development institution releases the Global Economic Prospects report twice a year. The academically highly valued Report mentions that the global economy is projected to expand by 3% in 2015, 3.3% in 2016 and 3.2% in 2017, following an estimated 2.6% growth in 2014. Developing countries grew by 4.4% in 2014 and are expected to edge up to 4.8% in 2015, strengthening to 5.3 and 5.4% in 2016 and 2017, respectively. The bank attributed the growth to "soft oil prices, a stronger US economy, continued low global interest rates, and receding domestic headwinds in several large emerging markets." Regional Analysis In its South Asia regional analysis the Report underlines India’s growth potentials and the positive initiatives taken by the Union Government in taking the country in a development path: “Growth rebounded strongly in Q1 FY2015, spurred by substantial improvement in industrial activity and aided by a recovery in investment and exports. The acceleration in industrial activity to 4.2 percent (y-o-y) was the fastest since

‘After the initiatives like Make in India campaign the economy had started showing signs of revival as it expanded by 5.7 per cent and 5.3 per cent in the second and third quarter of 2014-15.’

Q4 FY2012.The services sector remains the primary growth engine of the Indian economy, accounting for more than half of GDP. Services grew at 6.5 percent SAAR in Q1 FY2015, consistent with the trend average of 6.6 percent SAAR since Q2 FY2012, though well below the doubledigit growth rates seen between 2009 and 2011. “Activities related to construction, electricity, gas and water supply grew robustly and demand for capital and basic goods increased. Investment accelerated sharply to 7 percent y-o-y in Q1 FY2014 from an average growth of 0.3 percent y-o-y since Q1 FY2013. Agricultural activity slowed in Q1 FY2014 as the untimely rains in March adversely affected the winter crop. “Capital flows are back, signaling growing investor confidence. Portfolio investments by foreign institutional investors and foreign direct investment increased, with the reserve coverage rising to almost seven months of imports. The exchange rate has remained stable since last year’s depreciation, which stimulated exports and slowed imports. This, combined with import restrictions on gold, helped narrow the current account deficit to 1.6 percent of GDP in Q1 FY2015, near pre-global crisis levels. Inflation has moderated from double digits with an easing of food and fuel price growth. IMF PREDICTION The International Monetary Fund (IMF) in its latest World Economic Outlook report also projected a growth of 6.5 per cent in 2016, overtaking China which, estimated to slowdown to 6.3 per cent. The IMF forecast India for 2015 predicts that India

will grow at 6.3 per cent, up from 5.8 per cent in 2014. The United Nations World Economic Situation and Prospects UN WESP report too predicted a smart recovery for India during 2015. It pegged its 2015 India growth forecast lower than the IMF’s – 5.9 per cent. At 6.3 per cent, the UNWESP 2016 India growth forecast is, however, closer to that of the IMF.

percent, downward revisions of 0.3 per cent related to its October 2014 forecast. The revisions reflect a reassessment of prospects in China, Russia, the euro area, and Japan as well as weaker activity in some major oil exporters because of the sharp drop in oil prices, it is said in the Outlook. The US is the only major economy for which growth projections have been

India Taking the Lead

India

Percentage of GDP Growth

China

World

0 2012

2013

2014

The IMF forecost mentions that global growth will receive a boost from lower oil prices, which reflect to an important extent higher supply. But this boost is projected to be more than offset by negative factors, including investment weakness as adjustment to diminished expectations about medium-term growth continues in many advanced and emerging market economies. It cut its global growth projection for 2015 to 3.5 per cent and for 2016 to 3.7

2015

2016

2017

raised. “In India, the growth forecast is broadly unchanged as weaker external demand is offset by the boost from lower oil prices and a pickup in industrial and investment activity after policy reforms by the new Union Government. “India could overtake China but it must be taken note of that China has grown at high growth rates of 9 per cent to 10 per cent over decades and it is a much larger economy and India will have to work to sustain high growth rates over a period of time to be an engine of global growth”.

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MONEY & BANKING

The Improvement in Business Confidence is Visible Dr. raghuram Rajan

The outlook for growth has improved modestly on the back of disinflation, real income gains from decline in oil prices, & easier financing conditions

Governor, Reserve Bank of India

he Sixth Bi-Monthly Policy Statement announced by Dr. Raghuram Rajan, Governor, Reserve Bank of India is a reflection of positive signals for the economic revival besides the Reserve Bank of India’s realistic approach to financial regulations. The focus is rightly placed on strengthening the growth pace in the economy besides having a futuristic approach on expectations on the financial sector. Monetary Measures

Policy Arch

“On the basis of an assessment of the current and evolving macroeconomic situation, it has been decided to: a) keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 7.75 per cent b) keep the cash reserve ratio (CRR) of scheduled banks unchanged at 4.0 per cent of net demand and time liabilities (NDTL) c) reduce the statutory liquidity ratio

Policy initiatives in land acquisition, as well as efforts underway to unlock mining activity and to widen the space for foreign direct investment in defence, insurance and railways, should create a more conducive setting for industrial revival. 4

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(SLR) of scheduled commercial banks by 50 basis points from 22.0 per cent to 21.5 per cent of their NDTL with effect from the fortnight beginning February 7, 2015 d) replace the export credit refinance (ECR) facility with the provision of system level liquidity with effect from February 7, 2015 e) continue to provide liquidity under overnight repos of 0.25 per cent of bank-wise NDTL at the LAF repo rate and liquidity under 7-day and 14-day term repos of up to 0.75 per cent of NDTL of the banking system through auctions; and continue with daily variable rate term repo and reverse repo auctions to smooth liquidity.” Consequently, the reverse repo rate under the LAF will remain unchanged at 6.75 per cent, and the marginal standing facility (MSF) rate and the Bank Rate at 8.75 per cent. Industrial Activity The Statement mentions that the improvement in industrial activity in November 2014 was broad-based, but continuing contraction in consumer goods production underscores the persisting weakness in consumption/demand (even while raising questions about measurement of production). Advance indicators of industrial activity–indirect tax collections; non-oil non-gold import growth; expansion in order books; and new business reported in purchasing managers surveys–point to a modest improvement in the months ahead. Policy initiatives in land acquisition, as well as efforts underway to unlock mining activity and to widen the space for foreign direct investment in defence, insurance and railways, should create a more conducive setting for industrial revival. Faster clearances are also helping in resuscitating stalled projects. The improvement in business confidence is visible in a pick-up in new investment intentions, especially in transportation, power and manufacturing.

The Sixth Bi-Monthly Policy Statement announced by Dr. Raghuram Rajan, Governor, Reserve Bank of India is a reflection of positive signals for the economic revival The purchasing managers’ survey indicates slower activity in the services sector, especially in new orders. However, other indicators of the services sector including foreign tourist arrivals, automobile sales, cargo handled at ports, and railway freight traffic suggest improvement. Overall, growth prospects will be contingent upon a turnaround in investment and a durable improvement in the business climate to complement the upsurge in business optimism. The sharp reduction in oil prices as well as in inflation is likely to increase personal disposable incomes and improve domestic demand conditions in the year ahead.

increases in vegetable prices, which typically set in around March, have to be monitored carefully. In the fuel category, prices of constituents such as electricity, coal and cooking gas remained stable in the absence of administered revisions. Consequently, the CPI registered a monthly decline for the first time since February 2014. Inflation excluding food and fuel declined for the second consecutive month in December. This was largely on account of the declining prices of transport and communication since August, reflecting the impact of plummeting international

Outlook

Quarterly Projection of GDP Growth (Y-O-Y) for 2014-15 and 2015-16

10.0 9.0 8.0 7.0 6.0 5.0 4.0

70 percent CI

90 percent CI

Retail Inflation The Policy Statement makes an in-depth analysis of the inflation behavior. “Retail inflation, measured by year-on-year changes in the consumer price index (CPI), edged up in December on the expected reversal of favourable base effects that had tempered upside pressures since June. A slight softening of cereal prices and a sharp seasonal fall in vegetable prices moderated the trajectory of headline inflation, despite persistent firmness in the prices of protein-rich items such as milk, meat and pulses. However, seasonal

Q4 2015-16

Q3 2015-16

Q2 2015-16

Q1 2015-16

Q4 2014-15

Q3 2014-15

Q2 2014-15

Q1 2014-15

Q4 2013-14

Q3 2013-14

Q2 2013-14

Q1 2013-14

Q4 2012-13

Q3 2012-13

Q2 2012-13

Q1 2012-13

3.0

50 percent CI

It is pointed out that with the slump in international crude prices taking its toll on exports of petroleum products, and non-oil export growth also decelerating sharply, merchandise exports shrank in Q3 of 2014-15 after two consecutive quarters of growth. Export performance has been hamstrung by weak global demand conditions and the persisting fall in unit value realisations. The real appreciation of the rupee may also have had some effect. The fall in international crude prices translated into a sizable saving on account of POL imports, despite a pick-up in import volumes in Q3.

CI - Confidence Interval

crude oil prices; and softer commodity prices more generally. Inflation in respect of miscellaneous services and housing, however, declined more moderately. Weak domestic demand has restrained corporates’ pricing power and inflationary pressures in the non-food non-fuel category. Near-term as well as longerterm inflation expectations of households dropped to single digits for the first time in 21 quarters. Benign expectations are also mirrored in surveys of professional forecasters and industry conducted periodically by the Reserve Bank.

The Policy Statement reveals that the outlook for growth has improved modestly on the back of disinflation, real income gains from decline in oil prices, easier financing conditions and some progress on stalled projects.” These conditions should augur well for a reinvigoration of private consumption demand, but the overall impact on growth could be partly offset by the weaker global growth outlook and short-run fiscal drag due to likely compression in plan expenditure in order to meet consolidation targets set for the year. Accordingly, the baseline projection for growth using the old GDP base has been retained at 5.5 per cent for 2014-15. For 2015-16, projections are inherently contingent upon the outlook for the south-west monsoon and the balance of risks around the global outlook. Domestically, conditions for growth are slowly improving with easing input cost pressures, supportive monetary conditions and recent measures relating to project approvals, land acquisition, mining, and infrastructure. Accordingly, the central estimate for real GDP growth in 2015-16 is expected to rise to 6.5 per cent with risks broadly balanced at this point.The revised GDP statistics (base 2011-12) released on January 30 along with expected advance estimates for 2014-15 has to be carefully analyzed and could result in revisions to the Reserve Bank’s growth projections for 2015-16.”

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Star way

BANK OF INDIA CONTINUES TO MOVE FORWARD UNDER KEY PARAMETERS OF PERFORMANCE Domestic Business increased from Rs. 5,75,117 crore in December-13 to Rs. 6,27,850 crore in March-14 and to Rs. 6,72,225 crore in December-14. (7.07% over Mar’14 & YoY is 16.88%).

ank of India continues its onward march making significant progress in its operations under various parameters. Despite constraints in certain segments, the Bank is well-positioned to move forward as indicated by the financial results for quarter ended December 2014 announced recently at Mumbai. The report on third quarter performance also reveals Bank of India’s predominant position in business besides a deep commitment to contributions towards social sector development. A close-up view of the key aspects of business performance is presented here: Parameters

Growth

Growth% Dec-14 over Mar-14 (9 Months)

Global Business



10.25

Global Deposits



11.16

Global Advances



9.09

CASA deposits



5.40

Priority Sector Advances



7.35

PROFITABILITY ¡¡Net

Profit stood at Rs. 173 Crore

¡¡Operating ¡¡Net

Profit stood at Rs. 1,865 Crore

Interest Income improves to Rs. 2,780 Crore

¡¡Non-Interest

Income stood at Rs. 1,080 Crore.

PROFITABILITY (9 MONTHS OF 2014-15): ¡¡Net

Profit stood at Rs.1,765 Crore

¡¡Operating ¡¡Net

Profit stood at Rs. 6,061 Crore

Interest Income improves to Rs. 8,497 Crore

¡¡Non-Interest

Income stood at Rs. 3,111Crore.

Global Business ¡¡Global

Business increased from Rs. 8,10,687 Crore in December-13 to Rs. 8,53,202 Crore in March 2014 and to Rs. 9,40,623 crore in December-14. (10.25% over Mar’14&YoY is 16.03%).

¡¡Global

Deposits increased from Rs. 4,54,140 crore in December-13 to Rs. 4,76,974 crore in March-14 and to Rs. 5,30,213 crore in December-14. (11.16% over Mar-14 & YoY is 16.75%). Advances increased from Rs. 3,56,547 crore in December-13 to Rs. 3,76,228 crore in March-14 and to Rs. 4,10,410 crore in December-14. (9.09% over Mar-14 & YoY is 15.11%).

Path of Progress

¡¡Global

Domestic Business ¡¡Domestic

Business increased from Rs. 5,75,117 crore in December-13 to Rs. 6,27,850 crore in March 2014 and to Rs. 6,72,225 crore in December-14. (7.07% over Mar’14 & YoY is 16.88%).

¡¡Domestic

Deposits increased from Rs. 3,39,714 crore in December-13 to Rs. 3,63,590 crore in March 2014 and to Rs. 3,96,122 crore in December-14. (8.95% over Mar’14 & YoY is 16.60%).

¡¡Domestic

Advances increased from Rs. 2,35,403 crore in December-13 to Rs. 2,64,260 crore in March 2014 and to Rs. 2,76,103 crore in December-14. (4.48% over Mar’14 & YoY is 17.29%).

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International Business ¡¡International

Business increased from Rs. 2,35,570 crore in December-13 to Rs. 2,68,398 crore in December-14. (YoY is 13.94%).

¡¡International

Deposits increased from Rs. 1,14,426 crore in December-13 to Rs. 1,34,091 crore in December-14. (YoY is 17.19%).

Bank has received “Best Banker” award at the India SME excellence Awards2013, for exemplary contribution in Banking Sector.

¡¡International

Advances increased from Rs. 1,21,144 crore in December-13 to Rs. 1,34,307 crore in December-14. (YoY is 10.87%)

CASA ¡¡CASA

Deposits increased from Rs. 1,01,957 crore in December-13 to Rs. 1,11,161 crore in December-14. (YoY is 9.03%). Deposits increased from Rs. 82,138 crore in December-13 to Rs. 90,182 crore in December-14. (YoY is 9.79%).

¡¡Savings

¡¡Current

Deposits increased from Rs. 19,819 crore in December-13 to Rs. 20,979 crore in December-14. (YoY is 5.85%).

Asset Quality ¡¡Gross

NPA ratio stood at 4.07% in December-14 as against 2.81% in December-13.

¡¡Net

NPA ratio stood at 2.50% in December-14 as against 1.75% in December-13.

¡¡Provision

Coverage Ratio stood at 56.62%.

Capital Adequacy Ratio ¡¡Capital

Adequacy Ratio of the Bank under Basel III is 10.68% as on December 31, 2014.

¡¡Tier

I CRAR is 7.77% as on December 31, 2014.

¡¡Tier

II CRAR is 2.91% as on December 31, 2014.

Branch Network (Domestic): ¡¡As

of December 31, 2014, Bank’s distribution network at 4,835 Branches and 6,169 ATMs, with increase of 189 Branches and 1,944 ATMs over 4,646 Branches and 4,225 ATMs as of March 31st 2014.

Important Ratios (Q3 of FY 2014-15): ¡¡Global

NIM stood at 2.07% in December-14, Domestic NIM stood at 2.49% in December-14.

¡¡Yield

on Advances (Global) stood at 8.23% in December-14 and Yield on Advances (Domestic) stood at 11.07% in December-14.

¡¡Cost

of Deposits (Global) stood at 5.70% in December-14 and Cost of Deposits (Domestic) stood at 7.30% in December-14.

¡¡Business

per Employee increased from Rs. 18.44 crore in December-13 to Rs. 20.40 crore in December-14 and Business per Branch improved from Rs. 178.13 crore in December-13 to Rs. 193.38 crore in December-14.

Awards & Accolades received “Best MSME Bank” and “Best Bank for operational performance” awards from CIMSME (Chamber of Indian Micro Small & Medium Enterprises).

¡¡Bank

received “Best HR Technology award, 2014” from Banking Frontiers at Mumbai.

¡¡Bank

¡¡Financial

Inclusion & Payment System Award by Elets Media at New Delhi at the hands of Minister of Rural Development. won IT excellence award by ETNOW and VMWare for effectively implementing Virtualization in the Bank.

¡¡Bank

received the Award CIO100 2014 for the product Startoken NG.

¡¡Financial

Inclusion Deepening Award–June 2014

received Skoch Group Financial Inclusion Deepening Award–June 2014

¡¡Bank

has received “Best Banker” award at the India SME excellence Awards-2013, for exemplary contribution in Banking Sector.

¡¡Bank

has received Skoch award 2013 for IT innovation.

¡¡Bank

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Special Article

INNOVATION & INVENTION ARE KEY TOOLS TO ACHIEVE HIGHER ECONOMIC GROWTH Dr. C. Rangarajan

‘‘As we look ahead, growth is an important factor in generating employment and reducing poverty. Technology can play an important role in almost every sector of the economy in enhancing productivity and production.’’

Former Chairman, Economic Advisory Council to the Prime Minister

Creative Push

istory has shown that modern economic growth has been inspired by a rapid and persistent upgradation of technology and scientific knowledge. It is estimated that from one-third to one-half of the growth experienced by the industrially advanced countries has come from technological progress. Thus, technology has emerged as the principal driving force for long term economic growth. The ultimate purpose of all disciplines including science is social. Their relevance lies in their contribution to the well-being of the society. Science performs this role primarily through

its application to the production of goods and services and in this process it gets transformed into technology. Technology, by changing the production technique, results in improved productivity and it is through the increase in productivity that societies have achieved rapid strides in economic growth. Growth Dimension Economic growth results both from slow and steady improvements in technology and from knowledge embodied in physical and human capital as well as from the "breakthrough"

The test of success in innovations and inventions should also be measured by the emergence of new start-ups 8

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Invention is the outcome of the efforts of the scientists and technologists while innovation is the task of the entrepreneur inventions. Breakthrough inventions are, however, unpredictable and such inventions change almost the direction of the entire industrial structure. Schumpeter made a fundamental distinction between invention, which was the discovery of new techniques, and innovation, which consists of the practical application of an invention in production for the market. Invention is the outcome of the efforts of the scientists and technologists while innovation is the task of the entrepreneur. Production for the market occurs only when the scientist and the entrepreneur join hands. Our Universities and institutions of science and technology have an important role to play in pushing technological frontiers of our country. There has to be a close association between these institutions and industry. The Silicon Valley grew out of a Stanford industrial park which was set up by Stanford University and as one commentator has put it, to this day Stanford remains the engine room of Silicon Valley’s growth. Can our institutions of higher learning do something similar? It is not enough to churn out excellent engineering graduates. There is no doubt that talented engineers are required to run the production system in this technologically oriented world.

productivity and greater yield”. However, the importance of scientific inventions and discoveries in pushing outward the production function should not be under estimated. Gap Undoubtedly there is a gap between an idea or invention and new product or process that customers will buy. The entrepreneur has to step in to convert the idea into a saleable product, even though many a time a shadow can fall between the idea and reality. Historically, the long business cycles had been driven by different clusters of industry, starting from the first cycle driven by water power, textiles and iron in the late Eighteenth century. According to some writers we are

now passing through the Fifth industrial revolution based on semi conductors, fibre optics, genetics and software. It is this race to innovate that has compelled companies to allocate a part of their sales for research and development. Origin Innovations are not necessarily now the brain waves of individuals. Most successful innovations are, as it is said, “born, bred and brought to market entirely within well established organisations”. People who are engaged on this kind of a task have been described as intrapreneurs rather than entrepreneurs. One author has identified five crucial steps in the process of innovation – imagining, incubating, demonstrating, promoting and sustaining. Obviously innovation carries with it a

New Start-ups The test of success in innovations and inventions should also be measured by the emergence of new start-ups. We need new graduates who are professionally good and who are imbued with the entrepreneurial spirit. It is this combination which will make this country technologically strong. Innovation has become, as the Economist Magazine said in an article, the industrial religion of the late 20th century. While scientific discoveries and inventions have by and large spearheaded the process of technological change, it is not simply confined only to such discoveries. According to Jen-Baptiste say who is credited with coining the word ‘entrepreneur’ said an entrepreneur “shifts economic resources out of an area of lower and into an area of higher

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Special Article

great deal of risk. But once successful, it compensates for many failures. Future Prospects As we look ahead, growth is an important factor in generating employment and reducing poverty. Technology can play an important role in almost every sector of the economy in enhancing productivity and production. It has been estimated that only if we grow at 9 per cent per annum, India’s per capita GDP will increase from the current level to $8,000-10,000 by 2025. Only then we will become part of the middle income group of countries. Achieving and sustaining a high growth rate requires action on several fronts. Technology upgradation is one among them. In the task of transforming India,

young generation has an important role to play with their innovative skills, asserting themselves, increased productivity is at the heart of the economic progress of our country.

of a new method of production, (3) the opening of a new market, (4) the conquest of a new source of supply of raw materials, and (5) the designing of the new organisation of any industry.

Unlike the traditional approach which identified economic development as being led by capital accumulation, Schumpeter considered “innovation” as the engine of development in capitalist economy. His definition of innovation went beyond a scientific discovery or invention. To him, innovation is a process by which new ideas are utilised by entrepreneurs to create a new combination of resources to increase their profit. Innovations can take various forms such as (1) the introduction of a new good or a new quality of good, (2) the introduction

Wide-spread adoption of technology will facilitate larger usage and subsequent enhanced benefits to the society?

In the task of transforming India, young generation has an important role to play with their innovative skills, asserting themselves,

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While Schumpeter emphasised the role of innovation and that of innovator, what is also relevant to an economy is that of diffusion of technology. ‘Technology diffusion’ or the widespread adoption of technology by users other than the original inventor is recognised as key to generating higher economic growth. One can see a predictable inter temporal pattern with respect to diffusion of new technologies – technologies are adopted slowly at first, then more rapidly and then slowly as technology specific ‘adoption ceiling’ is reached. New Framework We need to evolve a policy framework in our country which encourages innovation and diffusion. This will require action on several fronts and must pay attention to (1) The overall macro-economic policy framework, (2) R & D efforts by individual firms, (3) Direct and indirect roles of Government and Government sponsored institutions in facilitating innovation and diffusion, (4) Identification of areas/industries to be given priority, and (5) The role of Universities and scientific institutions.

Highlight Feature

THE SCALE OF OPPORTUNITY WILL DRAMATICALLY CHANGE Shri K.V. Kamath

Chairman, ICICI Bank

‘‘It is important to realize that we need significant efforts to perform our potential.’’

en years ago most of us could not have dreamed of what India is today–but that journey gives us the basis to dream even bigger dreams for India and for all of us. India has demonstrated what this country can achieve. India has made remarkable progress over the last two decades and is viewed today as a land of opportunities. Today, there are endless opportunities across sectors, where young, dynamic people can make a difference. India’s growth has to be supported by developments in infrastructure, financial services, healthcare, education, retail, logistics and transportation, technology and communications. On assessing the growth opportunities:

Unlocking Future

First, we crossed per capita GDP of USD 500 and USD 1,000 in the same decade. While it took over two decades to double our per capita GDP from around USD 260 in 1980 to USD

550 in 2003, it doubled again in just five years and indeed today has crossed USD 1,500. This had tremendous implications for savings growth, consumption demand and the ability to finance investment in the country. Suddenly so many possibilities emerged, not only for growth in traditional business segments but also for building a whole new set of businesses. Second, the decade gone by saw the rise of the Indian consumer as a key driver of India’s growth. As per capita GDP crossed USD 1500, driven to a large extent by growth in the services sector, we saw rising demand for homes, for consumer goods, for financial services and a range of other goods and services. These in turn drove economic activity and upward migration of incomes, creating a virtuous cycle of growth. Third, India quickly adopted and leveraged developments in information and communications technology, in some cases leapfrogging intermediate stages of development. This enabled the quick scale up of new paradigms of distribution and service delivery in a range of areas. Fourth, the Indian corporate sector has today become operationally efficient and internationally competitive with significantly stronger balance sheets. This enabled the Indian corporate sector not only to leverage on growing domestic demand, but also to expand outside India, acquiring backward and forward linkages, making Indian brands known globally and also acquiring marquee global brands.

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The government’s JAN DHAN YOJANA project will be a path-breaking effort towards improving financial inclusion. It exemplifies how technology can be a game changer. On factors strong on India’s side:

On the new role of banking

Demography has been and will be one of the most important drivers of growth in India. By 2020, the demographic advantage in India relative to the rest of the world, including China, will become even more significant. India is a young country with 50% of its population under 30 years of age. The median age of our population is 25 years–this is projected to be at only 30 years even in 2025. It is estimated that India will add around 11 million to the workforce every year for the next five years and will account for 25% of the global workforce by 2020. These are indications of the demographic dividend the country enjoys, creating a growing consuming class and the human capital to drive growth.

Financial services remain under-penetrated in India, with substantial scope to increase access to financial services across the country, especially in rural areas and among low income households. In the past, a key challenge was the high cost of delivery of financial services through traditional brick-and-mortar structures. Two key developments have changed this paradigm. First, regulations have been introduced permitting delivery of financial services through business correspondents. Second, the development of technologies using smart cards and biometrics has changed the way banking services can be accessed by the customers.

Economic growth leads to a demand for better services, better infrastructure and a spurt in consumption demand. With income levels poised to improve further and the favourable demographic profile ensuring that a large proportion of the population is in the economically active working age group, consumer finance will continue to grow in the coming years.

On path-breaking new initiative: In this context, the government’s JAN DHAN YOJANA project will be a pathbreaking effort towards improving financial inclusion. It exemplifies how technology can be a game changer. The UID will not only help to create an identity and a unique identification mechanism that can help track credit history of consumers and improve service delivery, but also help achieve financial inclusion at a low

The speed of adoption of newer technological means and its impact has been breathtaking and as India continues to grow, technology will be a force for disruptive change. 12

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cost. Taking this a step further, it will also help improve governance and efficiencies in social sector investments. On the need to perform: It is important to realize that we need significant efforts to perform our potential. This entails outlining of our priorities such that the process of building the nation continues to translate to an improved quality of life across India. Inclusive growth is not just about subsidies or unemployment benefit schemes–at its core it is about building capacity in the poorest communities in our country to lead productive lives and earn a decent livelihood. Investment in basic healthcare, primary education and vocational training are critical to making this happen. Skill building is especially important. The scale of opportunity will dramatically change given that the economy would double every five years at least for the next two decades. The speed of adoption of newer technological means and its impact has been breathtaking and as India continues to grow, technology will be a force for disruptive change. There is thus a significant opportunity to leverage technology to drive new business models.

Special Interview

INDIA’S GROWTH PROSPECTS & CONNECTING RIGHTLY WITH FUTURE OPPORTUNITIES Dr. SOUMYA KANTI GHOSH

“Technology is unique in its impact on growth and has a special role in the process of innovation, because it affects the rate at which potential new ideas are converted into additions to the usable stock of knowledge in ways that nothing else can. In this case, IT gives the growth process an extra kick.”

Chief Economic Advisor, State Bank of India

GUIDING STAR : As a leading economist, in your view what are the key opportunity avenues for India in the next 3-5 years, analyzing from the research point of view?

Highlight Feature

Dr. Soumya Kanti Ghosh: India is transitioning into the next phase of the growth cycle where various avenues for growth. Manufacturing is likely to play a leading role in this growth trajectory. While the country leads the world ranking as a shared services destination, it is rapidly emerging as a manufacturing location for many foreign corporations. The high potential of the domestic market driven by demographic dividends, burgeoning, affluent and tech-savvy middle class, cost competitiveness and a mammoth pool of talent continue to make India one of the most preferred destinations for investments. However, in the next 3-5 years the areas which emerge as the key opportunity avenues for India are: Foreign Investment: The Government has taken a number of initiatives to invite foreign investors in India, namely ‘Make in India’, 100% FDI in railway infrastructure, 49% in insurance companies, with the proviso that the management and control of the companies must be with Indians. Foreign investment inflows are expected to increase by more than two times and cross the US$ 60 billion mark in FY15 as foreign investors has started gaining confidence in India’s new Government. India will require around US $1 trillion in the 12th Five-Year Plan (2012–17), to fund infrastructure growth covering sectors such as highways, ports and airways. This requires support in terms of FDI. Demographic Dividend: Approximately 200 million Indians are between the ages of 15 and 24 and India is well positioned to make the most of a growing population of working age. However, to reap the demographic dividend, India will have to manage the demand and supply of skills and labour carefully. While the government has introduced policies to improve

access to education, much more needs to be done to improve the quality of education, standards of teaching, methods of examination, development of skills, vocational programmes, etc. India should look in to develop public-private partnerships and social entrepreneurship programmes that can ensure livelihoods for its young population. Rapid Urbanisation: Indian cities are growing at an unprecedented rate–the country’s urban population is expected to grow to 590 million people by 2030. This rapid urbanisation is also expected to drive economic growth: according to some estimates, cities could generate up to 70% of new jobs created until 2030 and produce 70% of Indian GDP. To reap the economic advantages of urbanisation, the Government must develop better policies to meet urban infrastructure needs through sustainable means and address growing urban population. There is new enthusiasm on the basis of authentic global projections on India emerging as one of the fastest growing economy by 2016-2017. What India needs to focus to make the projections materialize in the right direction? The world is viewing India on a very optimistic note. This has been indicated in IMF’s World Economic Outlook, Jan’15 report where IMF has estimated that by 2016-17, India will become the fastest growing economy by surpassing China for the first time in history. However, in order to materialize these projections into reality a lot need to be done. Let me point out three of them: Containing Inflation: In the last year (2014), the average CPI and WPI inflation stood at 7.2% and 3.9% which is way above the RBI’s threshold level. Owing to that Reserve Bank of India (RBI) kept key policy rate (Repo) at 8% for the complete year. To attain the projected growth it is pertinent to manage both

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Special Interview

national and international mechanisms that induces inflation in the country. Fiscal Discipline: It is one of the most important indicators that external institutions and investors tracking for India. A lot can happen but still a long path is there to achieve. Our target of achieving 3.0% fiscal deficit by 201617 is a daunting task. In order to bring financial discipline we have to think differently about what exactly the role of Government should be. We have to bring in a modern tax system (e.g. GST) that is conducive to economic efficiency, that ensures that rates of taxation are moderate and therefore do not take away economic incentives. We also need a tax administration that is efficient and that can in fact collect taxes which in turn depends on a great deal of economic activity. In our estimate, implementation of GST would lead to higher tax collections, both by States as well as the Centre, and lead to a 1% to 1.5% increase in GDP growth. Along-with the tax reforms, there is a dire need to rationalise subsidies also. Building Infrastructure: Infrastructural development is one of the major determinants of economic growth in any developing country. Despite being the third largest economy in the world based on purchasing power parity calculations, India’s position is somehow undermined by a lack of world class infrastructure. India's average investment in infrastructure at 4.7% of GDP during 1992-2010 compares poorly against an average of 7.3% across 14

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China, Indonesia and Vietnam. India is ranked 90th out of 144 countries, as per the Global Competitiveness Report 2014-15, in terms of infrastructure quality. 'Inadequate Supply of Infrastructure' has been listed as one of the most problematic factors for doing business. Hence building world class infrastructure is the sine qua non for higher growth. Double Digit Growth Key sectors need to get a growth push to make India move on the new opportunity path. What should be the roadmap to make this happen in each category? For higher growth in future India need higher growth in real sectors of the economy. Although India will continue to be services driven economy but services growth will depend on growth in real sectors. ¡¡For

double digit economic growth, industry and more precisely manufacturing should grow at double digits consistently for next 10 years. Many foreign investors have decided to invest in the country in the recent past due to low cost of setting up of plants and available manpower. There is potential for manufacturing sector to account for 25-30% of the country’s GDP and create up to 90 million domestic jobs, by 2025 and in this direction ‘Make in India’ is a right step.

¡¡Time

is opportune to consider for ‘Second Green Revolution’ in the country to increase food grain production to over 450-500 million tonnes from 250 million tonnes at

present in the next 10 years. India needs to reform agriculture sector, for such. ¡¡India

remains an appealing, long-term retail destination for several reasons starting with its demography –half of India’s population is less than 30 years of age and roughly one-third of the population lives in cities. The disposable income of Indians is increasing–allowing them to spend more and try new products, brands, and categories. e-commerce and online delivery modes shapes the retail industry which

There is potential for manufacturing sector to account for 25-30% of the country’s GDP and create up to 90 million domestic jobs, by 2025 and in this direction ‘Make in India’ is a right step

Indian cities are growing at an unprecedented rate the country’s urban population is expected to grow to 590 million people by 2030. This rapid urbanisation is also expected to drive economic growth. will mainly driven by higher incomes, young shoppers, urbanisation and the increased use of credit cards. ¡¡The

infotainment industry has been largely driven by increasing digitisation and higher internet usage over the last decade. Internet has almost become a mainstream media for entertainment for most of the people.

¡¡In

healthcare, India's primary competitive advantage over its peers lies in its large pool of well-trained medical professionals. Also, India's cost advantage compared to peers in Asia and Western countries is significant– cost of surgery in India is one-tenth of that in the US or Western Europe.

¡¡Indian

education sector is recognized as a 'sunrise sector' for investments. This is because this sector offers huge potential to investors in the regulated as well as non-regulated markets. The vast diversity in ethnicities coupled with varying demographics has prompted different players to invest in the sector.

¡¡The

IT industry has not only transformed India's image on the global platform, but also fuelled economic growth by energising the higher education sector. ¡¡The rapid strides in the telecom sector have been facilitated by liberal policies of the Government of India that provide easy market access for telecom equipment and a fair regulatory framework for offering telecom services at affordable prices. Driven by 3G and 4G services, it is expected that there will be huge machine-to-machine (M2M) growth in India in 2016-17. There is also a lot of scope for growth of M2M services in the Government's ambitious Rs 7,000 crore 'Smart City' program. The Nation awaits a new beginning in effecting improvements in exports. Looking from the opportunity angle, how export sector is placed and what is really required to give a performance push? India is one of the world's fastest growing economies and with this growth enormous

exporting opportunities have emerged over the past few years. Given growth saturation in some of the major western trade partners, India should strategically shift its focus to developing Asian and African economies. I believe some of the sectors at present India should rely on and promote are Biotechnology, Pharmaceuticals, Chemicals, Communications, Creative Industries & Media, Education & Training, Environment, and Financial Services, Healthcare and Medical services, IT product and services and Retail franchising. Technology has redefined business patterns besides being a propeller to functional innovations in spheres like banking, retail and telecommunication. What is going to be the role and contribution of technology in economic growth in India in the medium term? Technology is unique in its impact on growth and has a special role in the process of innovation, because it affects the rate at which potential new ideas are converted into additions to the usable stock of knowledge in ways that nothing else can. In this case, IT gives the growth process an extra kick. The true benefits of technology are in its application, and if an effective deployment of a network that enables academic information to flow to rural areas brought millions of children access to better education, we should be able to improve our scores on literacy and employability. ‘Make in India’ The concept of ‘Make in India’ has created considerable enthusiasm. How this will benefit the industry in the medium term and what is required to make the concept work? Recent Make in India campaign by the Government has the commendable aim improving the efficiency of producing in India not only manufacturing but of agricultural commodities, mining, manufacturing, or services. But the dream of converting India to a global production hub is only possible if the country can address these issues smartly.

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Special Interview ¡¡Physically

linking every corner of the country to domestic and international markets through roads, railways, ports and airports. ¡¡Ensuring the availability of inputs such as power, minerals, and water at competitive prices. ¡¡Linking everyone electronically and financially to the broader system

young people and fulfilling their growing demands. The policy makers should enhance the ‘Make in India’ programme to create ample job opportunities in the economy. In addition the MSME activities in the country should also be promoted. Future Banking What

kind

transformations/

focus in the following areas to remain sustainable in their business operation: ¡¡Retail banking will be immensely benefited from the Indian demographic dividend. It is important to note that the middle class population is expected to touch 200 million by 2020 ¡¡Another segment that will provide huge opportunities will be the financing

‘ Young people are the innovators, creators, and leaders of the future but they can transform the future only if they have skills, health, decision-making, and real choices in life.’ through mobiles, broadband, and intermediaries such as business correspondents. ¡¡Encouraging the development of public institutions such as markets, warehouses, regulators, information aggregators and disseminators, etc. ¡¡Making possible affordable and safe homes and workplaces. ¡¡Improve in human capital through enhancing the quality and spread of health care, nutrition, and sanitation ¡¡Access to finance Along with increase in production base, India should always be prepared to meet situations of anaemic demand from slowing industrial countries that will be much less likely to absorb a substantial additional amount of imports in the foreseeable future. Youth Potential The educated younger generation in the country is looking to a new opportunity era marked by better life-style and social conditions. What should be the policy approach to meet the Gen-next expectations? India has the world's largest youth population (356 million) followed by China (269 million), Indonesia (67 million), the US (65 million), Pakistan (59 million), Nigeria (57 million), Brazil (51 million) and Bangladesh (48 million). Young people are the innovators, creators, and leaders of the future but they can transform the future only if they have skills, health, decision-making, and real choices in life. However, the potential economic gains would be realised through a ‘demographic dividend, which can lift millions of people out of poverty and raise living standards and catapult economies forward. But, this depends on how we are using this 16

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refashioning you visualize in the Indian banking sector in the next 3-5 years, considering the new expectations on greater and well-pronounced role for the financial sector in revitalizing the country’s economy? Indian banking in future is expected to grow exponentially supported by technology intensive processes and customer friendly models with focus on convenience and cost effectiveness. It is estimated that the domestic banking industry is set to see exponential growth in the coming years, with its assets poised to touch $28,500 billion by 2020, compared with the current $1,400 billion (2014). This would help the Indian banking sector to become the world's third-largest in terms of assets, followed by China and US. So, in our view, the banking fraternity should

of affordable housing for growing ‘low’ & ‘middle’ class; ¡¡“The

Next Billion” consumer segment will emerge as the largest in terms of numbers and will accentuate the demand for low cost banking solutions and innovative operating models, throwing up a big market of small customers;

¡¡Branches

and ATMs will need to grow 2x and 5x respectively to serve the huge addition to bankable population. Low cost branch network with smaller sized branches will be adopted. Mobile banking will come of age with widespread access to internet on mobile, reaping the benefit of the high mobile density in the country. Interview - V. Gopalan

Agro Future

Dr. M.S. Swaminathan

ENSURE EFFECTIVE CONVERSION OF BIORESOURCES INTO JOBS AND INCOME

Chairman,Dr. M.S. Swaminathan Research Foundation

s scientific and technological advancements a challenge in finding new directions to enriching the countryâ&#x20AC;&#x2122;s green assets?

Green Path

With the growing power of human beings in the fields of genetic modification and nanotechnology there is a need for greater attention to Bioethics. There are many ethical considerations in medical biotechnology, including the area of reproductive cloning. However, just because there are problems, we should not condemn the technology. Every area of frontier technology, such as nuclear sciences, can be used or abused. This is why the inclusion of Bioethics in the curriculum becomes important. Our aim in biological sciences should be the promotion of an era of biohappiness, based on the sustainable and equitable conversion of bioresources into jobs and income. Bio-happiness and not bioterrorism should be the end result of our scientific endeavour.

While science advances the frontiers of knowledge, it is technology that converts scientific knowledge into products and processes and thereby generates wealth. Translational research is particularly needed in our country in areas relevant to rural professions, including agriculture, where the gap between scientific know-how and field level do-how is widening. New initiatives in the sphere of Innovation a vital aspect now in giving a new dimension to Indian agriculture? Yes. The years 2010-2020 has been declared as the Decade of Innovation. It is hoped that India will become an Innovation Super Power by 2030. There is also frequent announcements about India becoming a Knowledge Super Power. Unfortunately, those who make such statements as well as the Knowledge Commission seem to overlook the substrate conditions necessary for our young people to become masters of innovation.

Food and drinking water are the first among the hierarchical needs of a human being. Food security at the level of each individual child, woman and man is hence the first requirement for a healthy and productive life.

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India has a vast untapped production reservoir in most farming systems, even with the currently available technologies. A recent report states that out of every 100 campus candidates interviewed by reputed companies about 20 have been found suitable. This points to the need for attention to the quality of education and also to the creation of opportunities for integrating theory and practice. Taking into account the uncommon opportunities provided by modern information communication technologies, we need to restructure and reform our teaching and training methods. We need a Pedagogic Revolution. The other essential pre-requisite for achieving the position of a Knowledge and Innovation Superpower, is an opportunity for every new born child to achieve its innate genetic potential for physical and mental development. Every fourth child born in our country is characterized by low birth weight (LBW) due to maternal and foetal undernutrition. Nearly 45% of children under the age of 5 in the country are under-weight. Such children suffer from many handicaps including reduced cognitive abilities. To become an Innovation Superpower, we must first fight against intellectual dwarfism caused by maternal and infant malnutrition. We need to have a new approach to food security issues? No doubt about it. We must adopt a whole life cycle approach in our plans for food for all and forever. We must not deceive ourselves into believing that by establishing 14 Innovation Universities, we will become an Innovation Superpower. It is worthwhile recalling what JRD Tata once said, “I do not want India to become a superpower; I want it to be a happy country”. Nutrition and education are the pathways to a happy country. Food and drinking water are the first among the hierarchical needs of a human being. Food security at the level of each individual child, woman and man is hence the first requirement for a healthy and productive life. This is why Mahatma Gandhi said in 1946 at Noakhali, “To the hungry God is bread”. What are the essential elements of sustainable food security? The three major components of sustainable food security are: 18

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(a) Availability of food in the market, which is a function of internal production, and where essential, imports. (b) Access to food, which is a function of adequate purchasing power, and (c) Absorption of food in the body, which is a function of clean drinking water, sanitation and primary healthcare. In industrialized countries, farming is a food or other commodity producing machine, while in our country, farming is the backbone of the livelihood and security system for over 60% of the population. In industrialized countries, less than 3% of the population is engaged in farming and may be called “farmer–consumers.” However, in India, over 60% of the population belong to the “ farmer–consumer” category. Several genuine concerns have been expressed by a Committee chaired by Dr C. Rangarajan with reference to our capability to increase food production to the extent needed to fulfill legal entitlements, the impact of higher government procurement on open market prices, and the total cost of the subsidy involved.

of money invested. This is because prices collapse when production goes up. Most African Nations do not have a machinery to purchase grains at a minimum support price announced at the time of sowing. The presence of such a mechanism is our strength. The challenge is to make the programmes people-reaching? We should therefore emphasize that what Government should do is to intensify efforts in production and procurement and not to continue the status quo with reference to millions of our children and countrymen remaining hungry. What we need to do to make food security initiatives people-reaching? Adopt a life cycle approach, to legal entitlements, starting with pregnant mothers.

Can you elaborate ?

a “First 1000 days Child Nutrition and Development Programme” should be organised to provide nutritional support to pregnant women so that the new born child has an opportunity for the full expression of its innate intellectual potential.

India has a vast untapped production reservoir in most farming systems, even with the currently available technologies. The gap between potential and actual yields ranges from 100-300 percent in both rainfed and irrigated areas, as per the data available with ICAR, Agricultural Universities, ICRISAT and Krishi Vigyan Kendras. A well planned “bridge the yield gap movement” on the lines proposed by the National Commission on Farmers will help to enhance the productivity and profitability of small holdings, leading to the alleviation of hunger among farm families as well as the other citizens needing nutritional support.

b. Enlarge the food basket to include nutritious millets (bajra, jowar, ragi, maize and minor millets) in the Public Distribution System (PDS), thereby achieving double benefits, namely, improving nutrition security, while at the same time providing a market for the crops of dry land farmers and tribal families. Over 10 million tonnes of these crops can be procured from dry farming areas, much of it, from tribal families. These crops are also capable to some extent of withstanding drought and adverse climatic factors. They will therefore help to promote climate resilient agriculture, an important need of the future.

Procurement is another important aspect. Procurement stimulates and sustains production. Without procurement we would not have had a green revolution in the 60s and 70s. This is not only true for our country, but even for the United States where the PL480 procurement helped to sustain farmers’ enthusiasm. In contrast, there has been no green revolution in Africa in spite of the enormous amount

c. Develop a decentralized procurement system and a national grid of community grain banks, rural godowns and modern storage structures. d. Under enabling provisions, the highest priority should go to increasing agricultural productivity, so as to meet the food requirements of 1.2 billion human population and 1 billion farm animals.

MEET MUKESH AMBANI: FACE OF THE NEW INDIAN BUSINESS ERA Shri. Mukesh Ambani

Corporate Corridor

he name Mukesh Ambani reflects a new era in Indian industry marked by an inspiring business philosophy targeting growth and national welfare, multiple expansions, stunning diversifications and drive for making great strides in every aspect of modern business. He is often quoted as ‘India’s richest man’. But he is admirably conscious of his responsibilities in social upliftment. Mukesh Dhirubhai Ambani is the Chairman, Managing Director of Reliance Industries Limited (RIL), a Fortune Global 500 company and India's second most valuable company by market value. He holds a 44.7% stake in the company. He is the elder son of the late Dhirubhai Ambani and the brother of Anil Ambani. Mukesh Ambani was ranked 36 on Forbes list of the world's most powerful people in 2014. Besides heading several top ranking companies of the Reliance Group, he also owns the Indian Premier League franchise Mumbai Indians. Forbes Business Magazine named him one of the richest sports owners in the world in 2012. He is indeed a multifaceted corporate leader with proven sterling qualities. He has served on the board of directors of Bank of America Corporation and the international advisory board of the Council on Foreign Relations. He was the Chairman of the Board of Indian Institute of Management, Bangalore, Mukesh Ambani was born on April 19, 1957 in Mumbai. His father Dhirubhai Ambani was then a small businessman who later on rose to become one of the legends of Indian industry. Mukesh Ambani did his Bachelors in Chemical Engineering from University of Bombay and Masters in Business Administration from Stanford University, USA.

Mukesh joined Reliance in 1981 and was the brain behind Reliance's backward integration from textiles into polyester fibres and further into petrochemicals. During the process of backward integration, Mukesh Ambani led the creation of 51 new, world-class manufacturing facilities involving diverse technologies that raised Reliance's manufacturing capacities manifold. World's largest grassroots petroleum refinery at Jamnagar is the brainchild of Mukesh Ambani. He was also the incharge of Dhirubhai's dream project Reliance Infocomm. But after the split in the Reliance Empire, Reliance Infocomm went to his brother Anil Ambani. Mukesh has ambitious plans to make the companies presence in the retail sector in a top slot. Another significant forward movement is the agreement with Haryana Government to establish a Special Economic Zone (SEZ) with an investment running into thousands of crores. The Reliance Group has grown to sky heights wherein he has directed the creation of 60 new, world-class manufacturing facilities that have raised Reliance's manufacturing capacities. He directed and led the creation of the world's largest grassroots petroleum refinery at Jamnagar, Gujarat, India integrated with petrochemicals, power generation, port and related infrastructure. Reliance Petroleum In his reign, Reliance Petroleum Limited has discovered several major oil and gas reserves in the KG Basin in 2006 and the KG-D6 project being the largest, which has turned out to be one of the lowest cost projects of its kind. Mukesh Ambani is also steering Reliance's initiatives in a world scale, offshore, deep water oil and gas exploration and production program, setting up of a second petroleum refinery at

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some of the awards and recognition bestowed on him are:

Jamnagar, development of infrastructure facilities and implementation of a pan-India organized retail network spanning multiple formats and supply chain infrastructure.

¡¡He

was ranked the 5th best performing CEO in the world by the Harvard Business Review in its ranking of the top 50 global CEOs.

Telecom & Retail Reliance Infocom Limited (now Reliance Communication) is a future-responsive business initiative. The venture is one of the largest telecommunications companies in India. The Group’s entry into the retail business through its wholly owned subsidiary Reliance Retail which has now expanded into several domains such as Reliance Fresh, Reliance Trends, and Reliance Footprint etc. has national presence. As a prominent corporate personality and thought leader, Mukesh Ambani, over the years, has been bestowed with several awards and appreciations. These include

¡¡He

I visualize more and more catering to consumers physically and digitally.

held the position of Chairman of IIM-B. Had the distinction and honour of being the co-chair at the World Economic Forum in Davos, Switzerland. Conferred the 'Asia Society Leadership Award' by the Asia Society, Washington D.C., USA,

¡¡Ranked

13th in Asia's Power 25 list of The Most Powerful People in Business published by Fortune magazine. Conferred 'ET Business Leader of the Year' Award.

¡¡Conferred

the United States-India Business Council (USIBC) leadership award for "Global Vision"

Confidence is the Most Important Element “I think both internal and external confidence has come back to India” On India’s Future Prospects: I expect that the Indian economy to outpace China to become the world's fastest growing in two years, but the country needs "mature governance" to tackle infrastructure issues. Indian businesses is upbeat as a sense of confidence has replaced the feeling of helplessness that prevailed earlier, and the country is lucky that oil prices, a big chunk of India's imports, are much lower this year. On Growth Rate "I clearly see with both flows and internal stability, we will gradually increase our growth rate and I have no doubt in my mind that we will be the fastest growing economy in the world in the next 2-3 years. We will exceed China's growth rate." On Being Confident on Future: I am confident on the Nation future prospects. In fact, confidence level in India had increased significantly, leading to a desirable change in sentiment. I believe for all economies it is confidence, and to my mind, confidence is the most important element. I think what we have got back at the individual level, at the institutional level and the government, the confidence has come back, the spirit of helplessness and what to do, what we can not do, has gone away. I think both internal and external confidence has come back to India." On Global Trend in Oil: It is significant. the year 2014 has been a lucky year for the country which depends heavily on imports for its energy needs. If we think about 2004-2014, oil prices went from $20 to $140 and now we are on the horizons of $60-70. That really is a gift of nearly $35-40bn from what we have used in a year. So, if this continues 20

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for two years, it's a gift from the world. Last year, we had paid penalty but going forward it's a gift to us." On Infrastructural Performance: “As regards the problems of infrastructure, I think that the government needs to strike a balance in addressing the needs and expectations of stakeholders in infrastructure projects. We will have to have a path to what I call mature governance, and the recognition that any investment will need returns, that return has to be fair and transparent. It has to be fair not only to the investor but also to the users of the infrastructure. For example, I have rail or port service, I should be able to afford the output after giving a fair return, so really it is a three-way partnership between the consumer, what the government wants and what the investor wants.’’ On the Group’s Growth Path: Reliance Industries will be completing investment of Rs. 200,000 crore over the last decade, which will reflect in production in the second half of 2015 and first quarter of 2016. "This itself, in a sense, doubles the Group. To double a company of our size in 2-3 years, to my mind, requires focus.” On the Retail Prospects: I visualize more and more catering to consumers physically and digitally. Our retail business grows by 25-30% every year going ahead. We are keen to tap synergies to explore and expand e-commerce through the platform of Network 18, a broadcasting arm of group. On Exploiting the New Online–Offline Avenues: "We will see an online-offline world and whoever is able to integrate that in the interest of the customer, if we generate customer value, I believe we will win in the market,"

PERSPECTIVE

Financial INCLUSION: VISUALIZING STAGE NEXT

S. S. MUNDRA Deputy Governor, Reserve Bank of India

‘‘Banks’ business models for financial inclusion should be designed to be at least selfsupporting in the initial phase and profit-making in the long run, with an unwavering focus on affordability. The banks need to think and act differently and make themselves more flexible so as to meet even the smallest requirements of the rural population.’’

Thought Window

hri S. S. Mundra: I would like to briefly highlight how the modern day banking has evolved. Banking, in the form that we know today, might have evolved during the 17th century. However, even in ancient Mesopotamia, all the modern banking practices such as deposits, interest, loans and letters of credit seem to have existed. The practice of safe-keeping and savings also seem to have been in existence in the temple of Babylon as early as 2000 B.C. Closer home, Kautilya, in his Arthashastra written about 300 B.C., has also mentioned about the existence of powerful guilds of merchant bankers who received deposits, and advanced loans and issued hundis (letters of transfer). In the modern times, an experienced Scottish goldsmith, William Paterson, is credited with the idea of setting up a national bank in Britain in 1688, which gave birth to the Bank of England. The modern day banking, in its simplest form, is meant to facilitate financial intermediation between the savers and the borrowers. It also seeks to act as a safe place to store money and earn some return in the process, as also a place to seek simple financial solutions to individual problems.

products and services best suited to their customers. As a result, both in terms of products & services and delivery channels, there has not been any dearth of innovations. On the product front, the innovations have led to emergence of complex offerings like swaps, derivatives and securitization, while on the other hand, the delivery channel is no more limited to brick and mortar branches, but has spread to modern, technology-driven channels like ATMs, mobile, internet and the social media, besides the Business Correspondent model. Thus, over the years, there has been tremendous amount of progress and innovations in the sector. However, these developments have, simultaneously, raised certain pertinent questions:

The advent of technology in modern times has heralded three distinct phases in banking: a) Computerization of back office processes during the 1980s, b) Facilitating higher customer convenience during the 1990s and c) Enabling lifestyle/life stage banking during the 2000s. Thus, over time, the banks have witnessed significant changes in their outlook and have emerged as financial supermarkets offering a range of complex financial products and services on a round the clock basis, duly customized to the needs of their customers through multiple delivery channels.

Having an insider’s view of India’s financial system, first as a commercial banker and now as a central banker, I intend to use this opportunity today to share my perspectives on the approach adopted by RBI as the regulator of Indian banks for making the Indian banking sector more inclusive and relevant to a large cross-section of the Indian economy and society. I shall also delve on the challenges which the banking system is encountering in realizing the goal of universal financial inclusion and the innovation and reforms that may be necessary to overcome some of these challenges. I also wish to emphasize that having bright and innovative ideas do not have any meaning until and unless they are acted upon. I, therefore, compliment the organizers for including ‘implementation’ as an element of the theme for the conference, as I believe that rigor in implementation is extremely important

Innovations A Key Tool? RBI, as the regulator of banks in India, has increasingly deregulated the sector and has allowed the market players to develop

¡¡Whom

have these innovations benefited? these product offerings demand driven? ¡¡Have the banks addressed the ‘suitability and appropriateness’ question? ¡¡Have the charges for various services been made transparent and non-discriminatory? Why banks are still a place where ordinary mortals fear to tread? ¡¡Why has a large section of the society remained financially excluded despite sincere efforts of the regulator? ¡¡Are

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There is still a widespread belief that if the poor have to be provided financial services, it must be done in a subsidized manner or as an act of charity. And this belief has kept the poor bereft of these services. for realization of the dream of universal access to financial services and products.

age population) currently excluded, into the formal financial system.

Why is Financial Inclusion necessary?

How inclusive is the Indian financial system?

The ILO Declaration of Philadelphia in 1944 proclaimed that “Poverty anywhere is a threat to prosperity everywhere.” It is universally agreed now that Financial Inclusion helps build domestic savings, bolster household, domestic and financial sector resilience and stimulate business and entrepreneurial activity, while exclusion leads to increasing inequality, impediments to growth and development. Thus, financial inclusion is an important tool for poverty alleviation as it not only connects individuals to the formal financial system, but also inculcates savings habit among them. Hence, Financial Inclusion or inclusive banking is a precursor for inclusive and sustainable economic growth. Dimension of the problem An accusation that has come to be levied against the banking sector in the aftermath of the Financial Crisis is that it has failed to be ‘inclusive’. Let me tell you that the Indian banking system is not alone in failing the ‘inclusion’ test. It is only the degree of exclusion that varies between different jurisdictions. The Financial Inclusion Action Plan (FIAP) developed by the G20 Global Partnership for Financial Inclusion mentions that the universal financial inclusion initiative requires bringing the 2.5 billion people (or about half the working

Census 2011 gives us some answers. Out of 24.67 crore households in the country, only about 14.48 crore or 58.70 per cent households had access to banking services. Further, of the 16.78 crore rural households only about 9.14 crore or 54.46 per cent households were availing of banking services. But that is only one aspect of the financial exclusion story. The statistics on number of individuals or households that are credit-linked makes for an even more gloomy reading. The World Bank Findex Survey (2012) points out that only about 35% of Indian adults had access to a formal bank account and a meager 8% borrowed formally in the last 12 months. If we were to broaden the canvas and examine the exclusion in the other financial segments of insurance and securities market, the situation is far worse. What has changed now? In the last few years, it has been realized that for financial inclusion to become a reality, there has to be a sustainable business and delivery model. Further, availability of technology as an enabler has now created avenues for developing cost effective solutions for the mammoth task of providing banking services to six

lakh plus villages in the country. The lessons learnt from the initial attempts at promoting financial inclusion have also proved to be vital inputs in recalibrating our financial inclusion strategy. a) Believing in Financial Inclusion as a viable business There is still a widespread belief that if the poor have to be provided financial services, it must be done in a subsidized manner or as an act of charity. And this belief has kept the poor bereft of these services while keeping the regime of rationing, queuing and patronage alive. Contrary to common perception, financial inclusion is a potentially viable business proposition because of the huge untapped market that it seeks to bring into the fold of banking services. Financial Inclusion, prima facie, needs to be viewed as “money at the bottom of the pyramid” and in order to tap this opportunity, banks would need to have in place an appropriate business and delivery model in line with their business strategy and comparative advantage. If the banks start believing in this business, they would be able to innovate and, in the process, start reaping the benefits of economies of scale. This will ultimately create an environment of competitiveness amongst banks which will benefit the unbanked population. b) Monitoring performance Along with the implementation efforts, the monitoring of the performance to

Over time, the banks have witnessed significant changes in their outlook and have emerged as financial supermarkets offering a range of complex financial products and services

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access the impact is also very crucial. The impact assessment helps in initiating policies and removing barriers to Financial Inclusion. We have encouraged banks to adopt a structured and planned approach to financial inclusion with commitment at the highest levels, through preparation of Board approved Financial Inclusion Plans (FIPs). A structured and comprehensive monitoring mechanism for evaluating banks’ performance vis-à-vis their targets has also been put in place. c) Leveraging the banking network for extending social benefits: Direct Benefit Transfer The introduction of direct benefit transfer by validating the identity of the beneficiary through Aadhaar will help facilitate delivery of social welfare benefits by direct credit to the bank accounts of beneficiaries. The government, in future, has plans of routing all social security payments through the banking network using the Aadhaar based platform as a unique financial address for transferring financial benefits to the accounts of beneficiaries. Besides providing timely delivery of benefits at the door step of beneficiaries, it would save Government the administrative cost involved in delivering cash to the intended beneficiaries and help minimize the chances of leakages in the system. Banks must initiate steps to proactively open bank accounts for all eligible individuals and see these accounts with Aadhaar numbers for ensuring smooth flow of the social security benefits through the banking channel. PMJDY comes as a new push to the financial inclusion initiatives? Pradhan Mantri Jan Dhan Yojana has been announced recently to give a further push to Financial Inclusion initiatives in India. The scheme has been launched with the objectives of providing universal access to banking facilities, providing basic banking

and mobile banking are also being made use of. Banks are also permitted to avail of RBI’s scheme for subsidy on rural ATMs and UIDAI's scheme for subsidy on micro ATMs to augment their resources at the village level. The objective of Financial Inclusion as defined by us is very much in sync with the objectives sought to be achieved under the PMJDY. We are fully committed to the implementation of the scheme and are

Having bright and innovative ideas do not have any meaning until and unless they are acted upon. accounts with overdraft facility and RuPay Debit card to all households, conducting financial literacy programs, creation of credit guarantee fund, micro-insurance and unorganized sector pension schemes. The objectives are expected to be achieved in two phases over a period of four years up to August 2018. Under the scheme, technological innovations like RuPay card

trying to ensure that the efforts of RBI converge with the work under the PMJDY so that the common objective of financial inclusion is achieved. Further, the idea is to enable more transactions in these accounts and providing more credit products, which will not only help rural people to avail of credit at comparatively lower rates of interest but, at the same time, also make

the financial inclusion process viable for banks. With implementation of PMJDY, it is expected that the beneficiaries of social security will get the direct credit of their entitlements without any leakage. However, for successful achievement of the same, it is to be ensured that there is timely and accurate listing of beneficiaries. Banks need to have a new approach, imbibing a new business model? Banks’ business models for financial inclusion should be designed to at least self-supporting in the initial phase and profit-making in the long run, with an unwavering focus on affordability. The banks need to think and act differently and make themselves more flexible so as to meet even the smallest requirements of the rural population. Banks need to move from a cost centric model to a revenue generating model by offering a bouquet of deposit, credit and other products and services. The products and services should be designed in such a way that it suits the needs of people in unbanked rural areas.

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GuruSpeak Industry To Be More Sustainable To Competition

Management

r. Prakash G Apte: Competition is the key and quality is a precondition to be competitive in a market-led economy. Once we ensure that our Industry and business are sure to make a mark in the global market it is now well understood that unless the industry becomes competitive and efficient, its prospects for growth and survival are closed. Some of our companies have made their entry and presence felt in the global market which is indicative of the capability of our industry. I think that any work on new agenda to put our industry back on the growth track should make our industry more and more sustainable to competition. In other words it should modernize them in content and concept. Future will demand more understanding of the intricacies of global markets, financial and technological participations, consumer preferences etc., No doubt some of the issues confronted by the industry and those issues restricting their growth should be tackled in a positive approach. The growth agenda should take cognizance of these areas. I see the simultaneous expansion of large and small industries is a viable economic mechanism for the progress of both. Therefore the policy should imbibe strategies for the growth of the small and medium sector which is highly employment oriented. I think quite a lot of research work is to be done by the industry associations and departments of the Government on this and the countryâ&#x20AC;&#x2122;s industry is sure to

The present difficulties are of passing nature and backed by appropriate measures the recovery is not far off. The downtrend in industry is, in fact, a global issue. 24

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Dr. Prakash G. Apte Management Expert & Economist

make an impact on the global scenario in a matter of few years. The present difficulties are of passing nature and backed by appropriate measures the recovery is not far off. The downtrend in industry is, in fact, a global issue. What should be the driving force of a national agenda to make the industry to be on a sound growth track? The thrust is we should move ahead. The country should not get stagnated in growthâ&#x20AC;&#x201C;we should correct fast any set back to industrial growth, agricultural growth, infrastructure or any such spheres. We should put forth all our resources like a large educated population, power of the knowledge industry, growing manufacturing sector, the promising state of agriculture and so on. The crux of the matter is the country should move fast in economic development with positive impact on social development. Our concept of economic growth is ensuring a better quality of life for our poor and removal of rural backwardness. In my view, we have to pay special attention on the growth of infrastructure, the urban infrastructure, when we are getting increased foreign investment in industry. We should pay attention on overall growth. Theory-based growth models have become state because of the advent of competition-led globalization and the power of technology-led new economy. The economic theories have their own relevance. In the area of core economics we see fresh approaches on some of the earlier theories and new concepts are also put forth. Theories in my view are not mere academic exercise. They are intended to explain and explore issues connected with the real life situations. Yes. We need to understand that there has been quite a lot of changes and emergence of newer concepts demanding a relook into some of our earlier approach to economic development. Broadly, the economic community is seized of this. There has been considerable work on globalization, liberalization, competition driven market, impact of technology, etc., There has been a good length of discussion on social and societal impact

of the economic compulsions. I think that the search for new economic solutions to the emerging social, and business scenario is on. But the theories will continue to be a source of support for such exercise. Do you visualize a new role for management experts in putting the industrial and business management on a dynamic growth path in the present context? I have no doubt in my mind that management experts and management institutions have a significant role in prescribing relevant economic growth models for the country. In fact Management Institutes like IIM, Bangalore have taken up several projects in that direction. I think there is immense scope for taking up specific projects covering economic development models. Management experts in my view are better placed to analyze because of their exposure to international business models and growth models. Newer management concepts can be used to vitalize the growth thought process. There can be greater coordination between management experts, industrialists, economists and policy makers on issues covering growth perspective. What is the main constraint in working out a new growth model? The best known hurdle is lack of consensus. We should try to evolve it in the larger interest of the countryâ&#x20AC;&#x2122;s growth and development. There are other hurdles when you look at the complex nature of our economy-like lack of discipline, and

commitment in economic management. I think things have started improving. Broad-based transformations are needed to chalk out a new growth model and implement it. Looking back, do you analyze the reforms as a tool for transformation? As far as economic reforms in India are concerned, we made a beginning in 1991 and the pace of progress has been at varied degrees. But the fact is we have taken up the reforms programmes and it has helped developments in a significant way. The reforms have made good impact on the industrial sector, services sector etc. and greater scope for reforms in such areas is well recognized. Reforms have facilitated larger flow of foreign investment and technology and products besides earning a special investor friendly status for India which is very important for socio-economic development. Future reforms are sure to help the industry even in greater scale. There are also concern on the negative impact of reforms on the weaker sections and certain segments of our society. The policy makers are conscious of these factors and are formulating strategies for the future. Globalization-based growth is often related to growing poverty, income disparities, lop-sided growth of urban and rural areas. The situation you mentioned indicates that these are the important areas which should be considered seriously when we

discuss formulation of a new economic model. Poverty is no doubt one of our pressing issues. Going deep into that would reveal its larger dimensions warranting serious remedial programmes. Taking a snapshot view of rural poverty, employment generation at the rural level, enlarging primary educational avenues, ensuring food and shelter, building up of rural infrastructure, health and nutrition are vital. Urban poverty is a serious issue as its implications are inputs to social unrest. But I think that if we maintain the countryâ&#x20AC;&#x2122;s growth rate at about 8 percent or slightly more consistently for the years to come it will have positive effect in gradual reduction of the heat of poverty. There is widespread confidence among economists that India is progressing well to become a middleincome economic power. I believe that a well-knit policy model is instrumental to its achievement. The opportunities we have in the area as of technology, global business etc. are mostly time bound and we cannot afford to miss them. We should work out such an economic and business growth model that broadly satisfies the needs of various vital segments of the economy. What is important at this juncture is to chalk out quick strategies to put our key sectors like industry which in my view has progressed admirably and have shown tremendous potentiality to grow even globally.

We should work out such an economic and business growth model that broadly satisfies the needs of various vital segments of the economy. BOI

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PROFILE

Projections

The IT Industry is at an inflexion point today 2015 Key Highlights ¡¡Industry revenues (including e-Commerce) estimated to grow by 13% in FY2015, to aggregate USD 146 Billion. ¡¡Industry a net hirer, adding 2,30,000 employees in FY15; focus on skill over scale, embedded non-linearity–7% employee growth corresponding to 13% revenue growth. ¡¡Digital Disruptions creating new opportunities-Digital accounting for 12-14% of industry revenues. ¡¡Product engineering solutions fastest growing export revenue segment at 13.2%. ¡¡Industry building competencies through acquisitions, collaboration and partnerships-industry M&A in excess of USD 5.3 Billion in FY2015. ¡¡Rapid growing product and startup ecosystem redefining innovation- 3100+startups, 4th largest startup hub in the world. ¡¡Government investments in technology of USD 26 Billion in FY2015 driving domestic market.

‘‘Combined with rising customer expectations of partnership, transformation and innovation–it has been a concerted effort by the leaders of the Indian industry to further build on their robust position.’’ 26

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R. Chandrashekhar, President, NASSCOM The current fiscal year FY2015 brought in overall optimism for the Indian IT-BPM industry and is expected to meet guidance for the year in constant currency. The industry continued to evolve over the year and prioritized on enhancing efficiency, enabling transformation and agility and partnering for digital initiatives. Aggregate industry revenues for FY2015 are estimated at USD 146 billion. A quick appraisal reveals a promising future outlook: Key features are : Clocked Industry revenues of USD 146 billion; Exports segment to reach USD 98.5 Billion; Domestic market grew by 14%- fuelled by e-Commerce; FY 2016: Exports to grow by 12-14%; Domestic market–15-17%. FY2015 is expected to see the export market at USD 100 billion, recording a 13.1 percent growth in constant currency over last year. Growth in reported currency is estimated at 12.3%. ER&D and product development segment is the fastest growing at 13.2 per cent, driven by higher value-added solutions from existing players and expansion of the GIC landscape. Digital solutions around SMAC–upgrading legacy systems to be SMAC enabled, greater demand for ERP, CRM, mobility and user experience technologies is driving growth in IT services. Infrastructure outsourcing and software testing segment also outpaced the industry growth rate. The BPM sector is being driven by greater automation, expanding omni-channel presence, application of analytics across entire value chain, etc. The domestic IT-BPM market is rapidly approaching the USD 50 billion mark. In FY2015, the market is expected to be a little over USD 48 billion, an annual growth of 14 per cent. This is faster than the average industry growth, and is largely being driven by the booming eCommerce segment. Stable government with a technology focused growth agenda is further boosting technology adoption in the domestic market. “India is jumping the technology maturity curve and is emerging as a digital economy. The recent announcements by the Government on

Digital India, Make in India, Skilling India are creating a renewed thrust on the domestic market. The Indian IT-BPM sector continues to be one of the largest employers in the country directly employing nearly 3.5 million professionals, adding over 2,30,000 employees. Digital Main Stream “We are delighted with the robust growth demonstrated by the industry during the current fiscal year. The industry today has a very diverse landscape which is constantly evolving and fuelling growth for the industry. Digital also became main stream during the year, with industry increasingly investing in digitized solutions to drive future growth opportunities. Interestingly digital solutions in the year accounted for 12-14% of the industry revenues, says Mr. R. Chandrashekhar President, NASSCOM. He added that the industry is expected to add revenues of USD 20 billion to the existing industry revenues of USD 146 billion. Export revenues for FY2016 is projected to grow by 12 to 14% and reach USD 110-112 bn. Domestic revenues (including e-Commerce) for the same period will grow at a rate of 15-17% and is expected to reach USD 55-57 billion during the year.

4th Largest Startup Hub A Report revealed by Nasscom further indicates that the year also witnessed hyper-growth in the technology startup and product landscape and India is already ranked as the 4th largest startup hub in the world with over 3100 startups in the country. According to the report, in the last decade India’s role has evolved from an arbitrage & talent led provider to a transformative partner, delivering significant business impact. Innovation has been at the core of this journey as this industry was born out of innovation in the form of the Global Delivery Model. With revenues approaching USD 150 billion and a market share of over 50% and a workforce of over 3.5 million employees directly serving the industry, India is today at the epicenter of the global services space, consistently enabling customers in their transformation and innovation agenda. This has been a remarkable journey and sets an eminent platform for a strong future. While commenting on the observations Mr. R. Chandrashekhar mentioned that “the impact of the Indian industry has been universal, across verticals, geographies and customer segments in delivering transformation and innovation. Customers are increasingly outsourcing business critical operations to India, and this trend

will only accelerate further as the industry matures. The emerging eco-system of digital technology startups and increasing collaboration is establishing India as a hub for innovation”. Talking about the study he further adds “Customers are expecting more collaborative partnerships in their transformation journey. The emerging consensus of value today pivots around effectiveness and business impact which includes the ability to drive innovation, fast track adoption of emerging technologies and enhanced competitive advantage”. “The Indian Information technology industry is at an inflexion point today. Combined with rising customer expectations of partnership, transformation and innovation–it has been a concerted effort by the leaders of the Indian industry to further build on their robust position. We see a conscious focus on building deeper industry capabilities, co-innovating with partners and corporate venturing supported by a vibrant startup ecosystem and increased R&D focus to provide access to innovation. Over the last two decades, we have seen the journey from cost and process excellence to also being an innovation and transformation partner. This is happening across the board. Today there is a strong platform and going forward, we will see further amplification of this trend"

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CMD Smt. V R Iyer handed over an Ambulance to Samvedna Trust, Ahmedabad under CSR initiative. (R to L) DM (C) Shri M L Arora, Zonal Manager Shri Rajkumar Mitra, Main Trustee Samvedna Trust Shri Jitender Patel, CMD Smt. V R Iyer, Chief General Manager (International) Shri R A Sankara Narayanan, Sr. Manager Shri P U Rathore, General Manager NBG (C) Shri T Sudhakar, Deputy General Manager (LCB) Shri M N Taneja & DGM (Audit) Shri S Naskar

Star Show Executive Director Shri B P Sharma inaugurating E gallery at Laxmi Road Branch, Pune Zone in the presence of General Manager NBG (W) Shri Tarlochan Singh & Zonal Manager Pune Zone Shri P A Joshi

Chief General Manager Shri R A Sankara Narayanan, General Manager Shri Sheoji Ram Meena, General Manager (Retail Assets & Publicity) Shri R C Baliarsingh, General Manager, NBG (W) Shri Tarlochan Singh, Zonal Manager, Mumbai South Zone Shri D K Garg & Deputy General Manager Shri D S Shekhawat during NRI Meet organized by Bank

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Shri Arun Shrivastava, Executive Director, Bank of India inaugurating the Bank’s Stall at ‘Pravasi Bhartiya Exhibition’ held at Gandhinagar (Gujarat) in presence of Chief General Manager Shri R A Sankara Narayanan, GM NBG (C) Shri T Sudhakar

Smt. V R Iyer, Chairperson & Managing Director with the PRSI Award for ‘BOI GUIDING STAR’. Also seen in the photo are Shri Charan Singh, General Manager (HR), Smt. K R Srimathi, Deputy General Manager (HR) & Shri S M Shakeel, Editor at Bank of India’s Head Office at Mumbai.

Shri S M Shakeel, Editor, Shri T Sudhakar, General Manager, NBG (Central) receiving the PRSI AWARD for ‘TAARANGAN’ - BOI’s House Journal from Shri Kailash Meghwal, Hon’ble Speaker, Rajasthan Vidhan Sabha & President PRSI Shri Ajit Pathak at a special function held in Jaipur

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REVEALING TRUE COLOURS

As a marketing tool, colour attracts consumers and can shape their perceptions.

he advent of electronic era marked by colour television and the multi colour pull-outs from the print media had drastically altered the colour personality of corporate marketing. Colour comes to the fore in any scheme or mode of marketing and advertising today. While consumer products marketing agencies put the colour cosmetics in the top gear to make a high focus of their superior creative impulses work, service sellers like banks, finance companies, e-commerce enterprises, corporate hospitals and even high-profile educational institutions depend heavily on colour strategies to connect emotionally with their respective target consumers. Indian postal service is a classic example of how the colour red can be an image of instant identity for them. The colour yellow has a high religious association in India and considered auspicious. Names / logos of enterprises naturally comes with well-thought out colouring and colour background. Colour here is not just beautification but it is used to reflect the corporate personality, service superiority, excellence in technology delivery and cultural ethos of organizations. While top ranking business enterprises窶的T companies, auto industry leaders, pharma groups and so on have their identity-centric colour preferences, banks and financial institutions excel in colour executions. Many banks world over use shades blue, silver, green, orange, red in addition to black to highlight their traditional value and priorities on

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customer focus. In recent times banks pay added attention on lighter shades to focus their strengths in technology-related services and readiness to serve the aspirations of the emerging generation next customers. The use of colour even extends beyond product sales; the Susan G. Komen Breast Cancer Foundation relies heavily on the colour pink to increase awareness of its cause. No wonder why advertising leaders and marketing gurus concentrate heavily on the colour route in making corporate and brand logos in appealing colours. The idea is not just to distinguish but to make the colouring a true mirror of their level of creative explosions. Marketing experts insist that colour is an important aspect of every initiative in corporate PR. They point out that it is not just logo or product/ service brands that invite imaginative colour applications but the very undercurrent of every advertising/ marketing initiative should necessarily have a colour insight. Why sudden focus on colours in innovative marketing? Because we live in a world that is inundated with colour. We are apt to become desensitized to the impact they can have on our emotional responses and

preferences. The fact that we are so easily manipulated has not been lost on product marketing companies who have studied the psychology behind each colour and how it can be used to influence us to purchase their products. Interestingly, the emotions stirred by certain colours. Since colour appreciation is a learned behavior, we tend to value colours in the same way our society has. Colour preferences of customers are not static. The need, therefore, is to constant efforts to upgrade colours. An important warning is–a bad colour selection may ruin even a great idea. As a marketing tool, colour attracts consumers and can shape their perceptions. Through colour, a brand can establish an effective visual

identity, form strong relationships with a target market, and position itself among competitors in the marketplace. Colour in advertising becomes the “silent salesperson.” When chosen carefully, the right colour can attract and hold the viewer’s attention, communicate what the business is really about, cement the brand identity and ultimately reach out. Branches of Indian fine arts are best example of how colour and imagination can jointly and successfully make the ‘mind churning’. Despite these leading industry trends, little

the scant anecdotal mentions of the use of colour in consumer behavior. Like a carefully chosen brand name, colour carries intrinsic meaning that becomes central to the brand’s identity, contributes to brand recognition and communicates the desired image. Brand loyalists thus become attached to a brand’s visual identity and may complain in response to changes in a brand’s colour scheme. Colour has been established as an important variable in the marketing literature and has been shown to affect

academic research has investigated the

consumer perceptions of advertising.

ways in which colour can shape consumer

The over-riding theme of the story of

perceptions such as brand personality,

colour in marketing, is not colour. It is

familiarity,

purchase

the idea–powerful coining of a brand/logo

intent. Considering the ease with which

name or customer-reaching literature on

companies can adjust colours digitally, it

product or services. Colour, no doubt,

becomes an effective tool to help shape

makes ideas shine. It is a great vehicle

brand perceptions. “While there has been

moving on the wheels of an idea from an

some early work that focuses on topics

imaginative mind.

likeability,

and

pertaining to colour more theoretically based research is needed to move beyond

—Ia Gopa

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Hindi Feature

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