NEW YORK – If Prime Minister Narendra Modi wants a cheerleader in the West for some of his innovative, yet controversial policies, to loosen tax flow and energize India’s economy, he need not look beyond Ajaypal Singh Banga, the President and CEO, and member of the Board, of MasterCard.
Speaking at a ‘New India Lecture’, at the Indian Consulate in New York, on ‘The Importance and Impact of a Purpose-driven Business’, earlier this week, Banga lauded Modi’s demonetization, Digital India, Goods and Services Tax (GST) drive, and the Aadhaar program, which he praised for giving ‘identity’ to people who were marginalized in society. He emphasized that he’s bullish on India’s potential and future.
“Could GST have been done better? Of course, it could have been done better. But at least someone has gone and done it which is better than just talking about it. In my opinion, Aadhaar is a great idea; it has given people an identity. Today, if you have an Aadhaar card, you exist,” Banga said at the meet, an initiative of Consul General Sandeep Chakravorty, in partnership with the US-India Strategic Partnership Forum.
The talk was moderated by New York University’s Stern Business School’s Professor of Strategy Praveen Nayyar, who like Banga, is an alum of IIM Ahmedabad.
“I congratulate the efforts of the things that are going on in India because instead of sitting around and saying why doesn’t somebody else do it, this government is trying to do it. Whatever else we may disagree with, this government is doing certain things,” Banga said of Modi’s initiatives.
Pointing out that at present only 4 percent of the population pay taxes in India, Banga said that scenario would change soon with the implementation of the GST, and there will be “multiples of four percent” when the GST cycle is fully gone through.
Calling demonetization a “brilliant idea”, Banga said, of the fact that more money came back than was initially thought: “That means there was something going on in the system. That’s not because demonetization was a bad idea. It’s because the system was bigger than the idea. It was a brilliant idea, it could have been done better but it was a brilliant idea.”
According to Banga, Modi’s vision of a cashless society and push for digitization will greatly benefit India.
“India is deeply impacted by terrorism as is this country. Do you really believe that the drugs that flow through from Afghanistan to Pakistan to India and corrupt the youth in Punjab today, that the drugs in America‘s campuses come in exchange for a credit card payment,” he queried. “They come in exchange for cash and yet society buys into the logic that cash is free and electronic payments are expensive. Society needs to wake up,” he added.
Banga opined that India need to look beyond the astute theory of manufacturing to unleash its full potential, and create the mind boggling task of one million jobs a month that it needs to churn out with monotonous regularity to keep up pace with needs of its workforce.
Banga advocated increase in productivity to ensure strong and sustained GDP growth, with emphasis on nurturing the talent of women.
“What India is trying to do and needs to do more of is democratizing productivity. India is all about creating jobs and quality of life. Whether you are a politician or a government employee, private sector person, mother, rich businessman, if you create jobs and you give quality of life that’s all India is speaking about now,” he said.
Banga said there is an urgent need to “empower women” in India, be educated, to run businesses, work in the public and private sector.
“You will see India’s productivity being unlocked in a way that nobody would have dreamt of 25 years ago,” he said. “When you think about the India you want to have, think about an India that democratizes productivity and cares about a woman,” he said. He urged citizen action on this, not wait for government initiatives to bring this about.
Banga decried the fact that 80 percent of India’s labor outside of agriculture is in the informal sector, where labor is cheap, there are no contract or health benefits, no incentives for employers to see increase in employee productivity.
According to Banga, the overt emphasis on manufacturing sector is a risky one.
“The manufacturing train is a hard train to get on today because supply chains in the world are getting disrupted, trade barriers are going to create further disruption of the supply chain. Besides, the cost of production in India is much higher than the cost of production elsewhere,” he said.
Banga added: “It irritates me no end that India does not get the idea that democratizing productivity cannot continue to be done with yesterday’s rules. It needs what is going on today plus more. Yes, Goods and Services Tax, yes demonetization, yes skill-building and focusing on other sectors like tourism.”
According to Banga, Artificial Intelligence and robotics will rapidly change the needs and viability of a manufacturing sector; India may have a hard time to adapt to a new environment, and import needs.
Saying that India does not have 25 years to get its act right in creating a massive amount of jobs, he pointed out that “time is not on our side because that demographic dividend could change into challenge relatively quickly.”
Banga also lamented the slow pace of India’s tourism industry, which lagged behind other western cities.
“India gets 10 million tourists a year as compared to New York City’s 47 million a year and Paris’s 80 million,” he said. “We are talking about 10 million in a country with the richness of India which has everything to offer. What does India not have? There is no point in producing only incredible India ads. Change what people see when they go there, what they feel there”, he said.
Banga, who is also chairman of the U.S.-India Business Council, a member of the board of directors of the Dow Chemical Company, member of the Council on Foreign Relations; and member of International Business Council of the World Economic Forum, was cautious on the burning topic of tariffs that is slowly escalating into a global trade war.
“Countries that have benefited over the years from the openness and transparency of nations that had opened up their markets for trade, need to also be willing to play by the rules, whether it is the obvious rules or the slightly less obvious, surreptitious rules,” he said.
Banga added: “My worry about trade is not to do with the idea that the principles of global trade need to be renegotiated to create a more level-playing field on all sides of this environment for recipient and exporting countries but also that the way of getting to that agreement has to be more mature than what I feel currently is the pathway that is being followed.”
Banga’s line of thinking seems to be in tandem with President Trump, as he said of globalization, “…trade rules have been decided and the manner in which some countries follow rules and others openly and flagrantly violate the rules, whether it been in intellectual property protection, duties, creating sneaky artificial barriers…needs to be addressed.”
Banga also spoke about of his pet subject: crypto-currency, which he termed as “junk”.
“I think crypto-currency is junk….The idea of an anonymized currency produced by people who have to mine it, the value of which can fluctuate wildly – that to me is not the way that any medium of exchange deserves to be considered as a medium of exchange,” Banga said.
(Sujeet Rajan is Executive Editor, Parikh Worldwide Media. Email him: email@example.com Follow him on Twitter @sujeetRajan1)