BRICS cannot help Goa Tourism

First appeared in  the Goan Everyday

The Chief Minister of the State has made a statement that the BRICS summit to be held in Goa latter this month will help tourism in the State. Most likely he made this statement to try and get some stake holders especially those in the Coastal belt to support some issues viz: mobile towers for improved connectivity. He must have felt that, with a lot of them depending on tourism for a lively hood they would relent and not oppose the last minute activity if they believed it would benefit them.

What is BRICS? BRICS is the acronym for an association of five major emerging national economies: Brazil, Russia, India, China and South Africa.  The BRICS members are all leading developing or newly industrialized countries, but they are distinguished by their large, sometimes fast-growing economies and significant influence on regional affairs. The stated objective is to focus was on means of improving the global economic situation and reforming financial institutions, and how the countries could better co-operate in the future or make an impact on global issues.

It is clear that BRICS has no role to play in the local economy let alone give tourism a boost in Goa. At most it will test Goa’s ability to hold an important Global conference in terms of venue, availability of hotels and connectivity. Not for the Heads of State, they will fly in on special aircraft but for the others, especially the world press. So it is good if Goa gives a good account of itself, one of the areas Goa wishes to position itself is MICE (meetings, incentives, conferences and exhibitions) tourism.

Despite knowing in March 2016 that the BRICS Conference was scheduled for Oct 2016, nothing much seemed to be done. If some planning had gone into the organising of the Conference would the hotmixing have to be done in a hurry, from the Aiport to The Taj Hotel. The shoddy work will come apart in a few months and the public money spent will be wasted. Hotmixing was done on the surfaces not prepared, while it appears nice, will it last. The widening of the Colva road was started a couple of months ago. Could it not have been delayed till after the Conference. Now, lots of dressing is being done obviously in a hurry and at an extra cost. This will have to be redone later and money spent again.

Does the “life” of the local also mean nothing, assuming that public money is of no consequence to the powers that be. All speed breakers have been removed, why were they put in the first place. Surely, if the Government wishes to remove the speed breakers for the duration leading up to the conference they would have additional police handling the traffic especially near educational institutions to ensure smooth and safe flow of traffic. It remains to be seen how quickly the speed breakers and rumblers are reinstalled post the Conference. More money will be wasted. I cannot believe that speed restricting devices would have been removed in a developed country just because the Head of State is going to pass. The quality of the work done near Carmel college means that the Head of State is going to feel the bump for sure.

A lot of effort and threats have flown past citizens like the waters of the Mandovi with regard to mobile towers. Does this mean that citizens are supposed to get a better service only because the Conference attendees need connectivity. Most likely each, Head of State will have his own communication system and surely not going to depend on BSNL or any other private operator. Mobile towers are required but using the Conference to shove it down the throats of the Citizens is not an answer.

If the Government is serious about pushing Tourism then it is not piggy back on the BRICS conference, but focus on a few couple of other things especially infrastructure.

Public Transport. Nowhere in the world where Tourism is a mainstay will you arrive at the airport and find yourself at the mercy of taxi drivers. Taxi’s are an option, and so are private shuttle services, public buses or trains. While a “train/metro” may or may not be an option in Goa, surely private shuttle service or KTC bus service is easy to implement. The industry association has already gone to Court to force the Government to get the Taxi’s to install meters. This shows that the Government is unable to implement a decision which will have a positive impact on the whole economy because of a seemingly negative effect on a limited vote bank segment. The irony is that if tourism booms even the taxi drivers automatically benefit.

Clean Beaches and public areas. One aspect that puts many a tourist off is filth. They associate filth rightly with unhygienic conditions and thus sickness. No tourist wants to fall sick on a holiday. Unfortunately, the Government spends crores of Rupees every month on contractors tasked with cleaning and there is not one beach which can be classified at the cleanest beach in Goa. For BRICS the large metal dustbins along the highway have been removed and the highway is being policed by specially paid contractors to ensure there is no garbage and it does look clean. Why cannot this system be in place all year round?

If the Government of Goa focuses on just infrastructure creation to ease transport woes and on Garbage, Goa will be surely be what God wanted it to be “a paradise” not just for tourists but also for the local inhabitants.

GST: Finally at India Inc’s doorstep

First published in the Herald

Wow, finally a decision, it took a good 20 years but it has arrived at the doorstep of India. The much awaited Goods and Services Tax has finally seen the light of day. There are still a few things that need to be done before implementation but no turning back now. India Inc., has to prepare for its rollout, anytime after 1^st April 2017.

The Government is surely going to pull all stops to ensure timely implementation; the Bill needs to be ratified by Lok Sabha and atleast 15 States have to adopt it before getting the assent of the President. All States bar Tamil Nadu are on board so there should be no hiccups. The reason TN is opposing it is because it is traditionally a manufacturing State and benefited under the current tax regime. GST is different in that sense as it is a destination tax and accrues to the consuming State and thus addresses an existing anomaly in the system.

The back bone that is being set up is GST Network or GSTN. This will be the interface between Center State, Banks and Companies and with electronic credit matching; compliance requirements could be pretty stringent. Private IT systems will now have to begin the task of becoming GST compliant, with details still being worked out, not much can be started so there will be a rush a little later. This will be the key to ensuring that those who make fake bills are shown up as all transaction have to be uploaded immediately.

In the foreground the GST law making process will take center stage and surely will not be easy. The key issue everyone is look at is the Revenue Neutral Rate, which will be decided by the GST Council. Currently 18% is being talked about. This council will subsequently also oversee the States demand for change in rates. As such it will not be easy for States to make arbitrary changes in rates as is the case at present.

The model law at present is attempting to widen the input tax base, but it will need tweaking as currently its provisions are more skewed to a lesser input tax regime or imposes restrictions on taking input credit in some situations, to ensure seamless credit more work needs to be done.

GST is a game changer. It is not just a new tax but will affect every aspect of business, including cashflows, pricing, supply chain, accounting, IT systems etc. It will change the way business is done. Take the example of a factory having warehouses in different States. Today they stock transfer and there is no tax till it is sold from that point. Under GST, the tax will have to be paid for stock transfers, the advantage is the credit in the books is also transferred to the stock point where it can be used at the time of sale. This means that a Company in Goa will benefit if it sells most of it goods outside Goa. Earlier the credit accumulated in their books and could not be used. In such cases the companies preferred to buy from vendors outside Goa paying 2% CST rather than from Goa with paying VAT at 12.5% and having funds blocked. Now manufacturers will have to consider if it is useful to have warehouses and stock points purely for tax purposes. Vendors from outside a State can be more competitive as there will be no 2% CST or C form hassle.

Another significantly different approach is that one can take credit on receipt of invoice, however if the seller has not deposited the tax within 90 days with his quarterly return, the buyer will have to reverse the tax credit with interest. So the onus of ensuring that the tax is paid is on the buyer. While this sounds harsh, it actually moves the policing away from the department to the buyers. If a credit is disallowed the buyer will refrain from using this supplier, and hence only those suppliers who comply will be able to operate in the long run. Tax evasion and avoidance will be curtailed automatically if not eliminated. Without bill transactions should be a thing of the past.

Once GST kicks in there will be transition of unused credits, so the tax paid on inputs on stock will be allowed to be carried forward as input tax credit under GST. Questions will remain till the details are ironed out. What happens to the CST paid under current tax regime, will it add to the tax credit or will it lapse as before?

Valuation will be based on the existing Central Excise and Customs rules with arm’s length and related party transactions being the guiding principle. But surely this is one area where litigation will be rife. Under GST even free samples or promos will attract tax, so what happens to loyalty points then?

Companies will have to prepare a road map for the switch over. Big or small an impact analysis will help understand in which areas costs will increase or decrease, how will cash flow be impacted and what IT changes will be needed in existing systems etc. For this each Company will have to set up a core team, who will study the impact and if required they must be ready with their representations when the GST Law is in draft stage. They must get copies of the statutory registers and records that will be needed so as to plan for their implementation. Employee training will be a must. Finally, everyone must put their heads together and decide what part of the existing business model has to be reworked.

Make in India, sell anywhere in India. If you get it right, your business can benefit from GST.

Public Money is not for wasting

First Appeared in The Goan Everyday

The recent BRICS summit in Goa has brought into focus the spending on sprucing up the State when it comes to organising a big event. There is no doubt that an event of the stature of BRICS will give a small state like Goa, prominence. The fact that the summit will end with a declaration to be called the Goa Declaration will add to the value brand Goa. By all accounts it is going to be a successful summit and that will add to India’s stature. PM Modi, right from the word go has been pushing an aggressive diplomatic policy and this is will be another feather in his cap.

However, can we learn from this event? Can we look at what could have been done better? So that after all the dignitaries have gone home and the dust has settled, Goa would have benefited a little in real terms, on the ground and not just hype.

The CM Parsekar has stated that the State has spent between 70 to 75 crores on making Goa BRICS ready. The Center was supposed to allot 200 crores for this purpose. Did they reduce the budget? Was the State forced to shell out money from its already stressed finances? Wonder if there will be any account given or will asking for an account make one anti national? After all national pride is involved.

If one looks at the list of works done they are all mainly in the realm of maintenance. Shifting poles, transformers, fixing lights, etc. So technically we spent 75 odd crores on make up. The widening of the Colva road is widely believed to be part of the BRICS preparation, if it really was, it is an ambitious project to undertake given the time span available. Ofcourse as Putin and Co zipped past, they may not have noticed it is incomplete. They cannot be blamed because good money was spent on ensuring it looked complete, this needless expenditure will have to be wasted in order to actually complete the road.

Black topping the roads, the Colva road was given two coats, especially when it was raining was a bad idea. Hopefully the surface which has already started crumbling will be good enough to give Putin and Co a relatively smooth return journey. Else, we can expect the PWD to give a fresh coat just before they leave their hotel for the airport. So it is clear the work done on the roads is not only hasty but also shoddy and will not last too long. However, public memory is short so nothing to worry about.

The stretch from Airport to Mobor had lines painted on the road, the kerb stones painted yellow and black, the missing road dividers replaced, rumblers removed, potholes repaired and all the electrical poles painted. Question is how was the work tendered and who supervised the same. Take the example of the poles which were painted. The workers simply painted the poles over the rust, dirt and holes. Was that specified in the tender or was it mentioned, first paint primer and then two coats of blue paint. Consider the Verna Bypass, it is partially done in some stretches, basically patch work. How will the contractor raise the bill, for patch work or for the whole road.

Is replacing rumblers part of the tender or will that be another tender and how long will it take. The rumblers/ speed breakers are there because of safety issues, so will the Government act quickly to replace them or will it be replaced only after a couple of accidents. Ideally it should have been part of the original tender ie removal and replacement of speedbreakers/rumblers. If the leaders needed a smooth ride, could they not have been taken to the hotel by a chopper or by boat like the IFFI delegates?

Coming to issue of tenders, we all know that the State Government got a firm confirmation about BRICS around March 16. Were the tenders for the different works issued in time or were they “short tender”, meaning urgently required so checks and accountability are bypassed with this type of tendering.

The banners, bill boards were plastered around the route. Wonder how they get accounted for and who does this job of checking “ordered v/s delivered” before the payment is released? Would be interesting to know.

There was a budget for the refreshments of the police personnel on bandobast duty. They did a good job and were on their toes continuously. Reports indicated that they were forgotten about and one of them suffered a heart attack. There was a small pickup going around distributing tea, not sure what else. Contrast this with the army style. At Trinity beach, where an antiaircraft gun was positioned, an army truck came by with dinner for the guard detail. Very impressive.

While most of the work appears to be cosmetic, there is one job that will benefit Goa in the years to come. It was long pending. The airport road has been illuminated. They did the job in a few days, so why was it not done for so many years?

The preparation and execution of the various jobs in such a short time points to the fact that if required the administration can get its act together and can deliver. What should now be added to this capability is planning. Imagine the same jobs delivered in time for BRICS but planned and executed. It would have ensured better and more efficient utilisation of public funds. Something that was lacking and needs to be addressed.

New Education Policy: Backward or Forward

1st appeared in the HERALD

The shifting out of Former Education Minister Smriti Irani was probably the best thing that could have happened for education. Among the first things the new Education Minister Prakash Javadekar’s did was extend the deadline for seeking public opinion.

Not known to many, the NDA II government is currently drafting a new education policy “to meet the changing dynamics of the population’s requirement with regards to quality education, innovation and research”. This would be a perfect starting point for a noble cause given India’s push to become an intellectual super power on the back of an IT boom.

However, some things were just not right, why was this path breaking initiative kept under wraps, in fact only 43 pages of the entire report were circulated. Surely anyone studying such a condensed version would have more questions than clarity. Considering the report is in two volumes. The first, in 230 pages, contains nearly 90 suggestions; the second has over 100 pages of annexures, these suggestions supposedly evolved out of extensive grassroot study.

The panel has recommended significant interventions such as amending the Right to Education (RTE) Act to bring back detention of students after Class V, elimination of unviable schools and making minority schools reserve 25% seats for candidates of economically weaker sections (EWS). The last provision tramples the rights of the minority institutions (linguistic and religious) which is enshrined in the Constitution.

Thankfully this has been corrected with the release of the complete version and extension of the date. However, no visible effort is seen to make the policy widely available to schools, colleges etc for allowing proper debate.

We have had two NEP’s, 1968 and 1986, under Indira Gandhi and Rajiv Gandhi. The National Education Policy (NEP) of 1986 was revised in 1992 when P V Narasimha Rao was PM. So it not something that is not or cannot be changed. What would be watched is the process and that has ruffled some feathers, especially the minority institutions who run many educational institutions and whose views should be considered given their experience. Hopefully under the new Minister this too will be considered.

From the official website, the NEP was formulated with a time bound BOTTOM UP approach and different from previous exercises which were supposedly TOP DOWN. Also rather than have experts this time the ministry opted for discussion village education committees across all 2.5 lacs Grampanchayats. Was Goa left out as nothing was reported or maybe Goa does not count. Not many in the education sector have heard of this new policy, which would mean the fault of the sector or the ministry?

The Ministry feels that previous policy consultations took between 3 months (really) to 6 years, hence this policy is going to be time bound. However time bound does not mean not doing things as planned in the “Consultative Framework”. The consultations with National education bodies was done over one day each. Considering the themes listed out in the Consultation document, it is too little time given the importance of the subject.

The themes are no doubt very good, especially focus on teacher training and quality.

Fatorda MLA Vijai Sardesai raised the issue of “neighbourhood school” as envisaged under the RTE Act, it was not being implemented, kids travel more than 1 km to get to school. Under the NEP this will be done away with. Schools which are small or are not viable will be consolidated. MLA Vijai is unaware that the NEP is already proposing to do away with what he is asking to be implemented.

Education is a State subject and the NEP will provide broad guidelines for the States to follow, should not the States be well aware and contributing so that the States plans and the National Policy do not oppose each other?

The current Minister is a product of student politics. Will he agree to the view that student politics is a distraction that should be eliminated from every campus. Will it be possible to prevent as envisaged, formation of student groups on the lines of religion or caste or politics, would it not violate the fundamental right of a student. Did the recent unrest or rather ham handed handling in the JNU campus have an effect on getting this issue included in the policy?

The most important issue to my mind that needs to be discussed is this. The guiding principle for the recommendations made in the NEP ….more than economic objectives, education should aim to “develop pride in India and in being Indian / with roots embedded in Indian culture etc”. So did the panel findings include the fact that those produced by the current education system are less nationalist or cultural misfits and hence this problem has to be addressed. Then contrast it with an objective of NEP, make student more employable, do corporates employ students who are culturally sound or those who have the necessary skill sets to do the required job. Where is the focus?

The NEP has raised more questions than provided solutions. The method of discussion or dissemination or consultations have left mush to be desired. There seems to be a knee jerk reaction to various happening and above all a scant regard for constitutional rights. It appears that the current draft policy has hidden agendas.

It would be therefore imperative for the Minister Mr. Prakash Javadekar to review the process and once again go back to having proper nationwide consultations with actual stakeholders so that the revised draft meets the minimum expectation of improving the quality of education and enhancing the employability, and in his own words, A STUDENT CENTRIC POLICY.

Taken for a ride: by a taxi

1st appeared in the Goan Everyday"

The literal meaning of “taken for a ride” is cheated. In Goa, that is happening day in and day out, if you take a taxi, you are going to be taken for a jolly good ride. The worst part is, this happens with the blessings of the administration. The solution is blowing in the wind but the will is missing as votes are more important.

The taxi drivers know that they are on the wrong side of the law. But with political patronage they stand nose to nose with any authority and demand brazenly that they will install GPS meters only if illegal taxis are stopped and two, hotels and airlines do not charge high fares. This amounts to saying, I as a citizen will follow the laws provided there are no murders in Goa. Can such conditional acceptance of the law of the land be allowed, and should the authorities be mute spectators to such an audacious demand?

There are three types of taxis that operate in Goa, Black and Yellow: Usually found at prepaid stands at airport and stations. That is there domain. The private taxi is next, usually white cars. They operate from home ie anywhere or hotel gate (their turf) or important corner in village or town. The last is the illegal or unauthorised taxi. They are basically private cars on hire. The owners are usually Government servants and this is their extra income. One can now understand the blind eye by officials to this activity.

The taxi trade has to be counseled to realise that they cannot compare themselves to the hotel or airline industry. There is no alternative to taxis, a pity but if there is no public transport the only other options is your own vehicle and it shows in the growing no of registrations. Hotels, each offers different rooms, amenities and service levels, if one hotel prices itself above its level it will loose customers to another Hotel, in case of airlines many choose not to fly if the fare are too high.

The average profile of a taxi driver is school drop out and usually it is owner driven. Some owners do have drivers or more than one taxi, but all the drivers move on to becoming owner drivers sooner than later. The taxi business is usually operated from the house or nearby hotel or tinto. Most airport taxis owners are usually from around the area, radius of 10-15 kms. There are a few biggies who have a fleet of cars and they usually do not operate from the airport or station.

Now, with the above profile and collectively having associations based on North and South. One will not expect too much in terms of understanding either business, operating policy or expanding customer base. This lack of knowledge drives the taxi stake holders to the worst possible mediators, the politicians. The politicians is usually a long term player, but the term he is considering is his own reelection. So the focus is on short term decisions which do not need any thinking and definitely will not take the politicians time.

Thought must be given to the following and educating taxi drives about their impact and benefit must be part of the process. First and foremost is to pick low handing fruit, ie illegal operators. That ofcourse is the most difficult as it would mean authorities have to take action against themselves.

The next is the fact that taxi owners/drivers have to embrace technology. Today, there are customers waiting for taxis and taxis waiting for customers and the twain do not meet. Technology can change that and once the taxi trade accepts this, business will explode. But the Government should not wait, they should implement, it is good for taxis and customers. That is the mandate of Governance, see all sides.

This brings us to the root cause, one can argue which comes first, the customer or the price, in this case both have to be addressed simultaneously or it will not work and that is “GPS with meters”. The conventional meters are easy to fiddle with, lower air pressure increases mileage done or the tax can make unnecessary loops. GPS based system cannot be tampered and extra loops can be eliminated.

The Meter, eliminates the need for using the current area wise charts, eg: if there are two passengers headed for Verna, one going to industrial estate (11 km) and other to the Udear spring, (17km), both are charged the same Rs 530/-. While both 48/km or 32/km resp., is exorbitant, it is good for neither the passenger or the driver. For passenger one is paying more and for the driver he is getting less every time he drives deep into the area. Most times this results in arguments as the driver feels the customer has mentioned a closer destination to get the benefit of a lower fare.

They drive back empty and rashly just to get back into the queue again. Had they been using an “app”, it is possible that there is another passenger who wishes to go to the airport or in that direction, rather than empty and haggling, the driver can first become aware of such a customer and two, because of the meter a fair charge is payable.

The TAXI which is an asset is used more, the price comes down, the reputation goes up and the customers increase. The ordinary TAXI METER with GPS backed by a taxi hailing “app” will change the way Goa sees taxis, everyone will happily go for a ride.

Where is the “ease” in doing business?

Goa is in the news again and for the wrong reasons. It is ranked 21 among all the States and Union territories. The ASSOCHAM report which similarly stated that Goa needed to do a lot more was brushed aside by the Government and an Industry body came to the Governments rescue. The Industry reaction was viewed with suspicion as it did not reflect the ground realities but pandered to the Governments need for support. This report prepared by the Center in conjunction with the World Bank cannot be brushed aside and only highlights the fact that “all is not well” when it comes to helping business function easily.

The much touted IPB (Investment Promotion Board) formed under the Investment Promotion Act, lost it legs a few days ago when the Chief Minister declared it was not a single window for investment in the State as was given to believe. The statement coming on the heels of questions raised by the High Court only proves that acting in haste and trying bulldoze the opposition to accept projects without thinking, ends up in actually delaying projects and increasing the tension of doing business in Goa.

The statement by the Chief Minister is also surprising. If this was the case why was the “in principle” approval assumed to be fait accompli and why was the impression that IPB subsumed every other statutory body eg: TCP, GSPCB etc given. Why was this clarification not issued earlier. Actually, the reason real reason for creating the impression that it was a single window was to convey to the other arms of governance that there should be no questions asked and the applications have to be fast tracked irrespective of the situation, the IPB has seen the power point presentation and approved.

The IPB drafting committee did not have a single hotel industy expert, after its formation it was decided that the “investment’ in IPB would include hotel projects, originally it meant manufacturing and services. Hotels, are an investment, question is what prompted their inclusion.

If one studies the hotel projects approved (now reverted to in principle approval) by the IPB and study the details of when the properties were purchased, one will surprisingly note that the properties were purchased before 2012, however none of these properties could have seen the light of day as hotels because they were all either Kazan, orchards, fields or no development zones as per the Regional plan. Once the IPB came into existence, all these properties immediately submitted their plans for hotels and were immediately approved. Now we will have to wait and watch what happens in court as other than TCP, IPB cannot make a zone change.

The IPB has to follow the IP Act which lists thrust areas. It was surprising to note and see that an alcohol manufacturing unit was accorded approval in an orchard. Alcohol is not a thrust area, new alcohol manufacturing projects are banned in the industrial estates. One Government, two rules. Should alcohol manufacturing be allowed or not is not part of the discussion, why different interpretation by different arms of the same Government. This project also had the distinction of needing support of a notification which classified all the toddy tappers in the State as grasshoppers by declaring coconut trees were not trees.

The IPB has many mandates, approve projects is one, what about others. The IPB is supposed to recommend or decide how business can be facilitated. These has two aspects, infrastructure building and administrative reform. It is not only land that is scarce and needs to be provided, what about electricity and water.

The IPB in its wisdom actually rejected a project of a steel processor, this decision was over ruled by a cabinet decision despite a cabinet decision banning new steel mills. The electricity department assured the project 10MW of power, yet industry is crying for power for expansion and there is none. Should the IPB not be studying the power and water scenario and recommending to the Government ways to augment the same.

Administrative reforms are what industry has been harping on and this was just the right place to make a difference. The IPB application could have been designed so that when one applies to the IPB all information required for other departments concerned in also included and any department can process the same applicaion. The investor makes only one application to the IPB and the IPB passes it on to the respective departments and gets their approval or objections based on which the IPB gives its own in principle approval. The difference here is the investor is not following up with the departments but the IPB. This way post the in principle approval, departments cannot raise any new issues or decide against the project.

The “Ease of doing Business” ranking is very objective with 325 plus issues that need to be reformed by a State, these could have been discussed by the IPB and recommendations made to Government to reform areas like, inspection, online submission, multiple applications, increased use of IT for uploading returns etc. The IPB did nothing of this and the result is clear to see. RANK 21.

Going forward the IPB has to sit back and take stock of the situation...THINK. The best place to start is the ranking report. Being objective it gives clear guidelines as to where and what has to be done, let the IPB start doing this, forget giving rushed and dubious clearances, they will anyway get delayed when aggrieved citizens approach the court. Keep politicians out, bring in domain experts, clean up the business environment and the good projects will come. Goa is a great State and if the system supports, it will be a great State to do business.