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Thank you Noyan Aydin for prodding me at producing a personal comment on a terrible state of affairs. (answer edited accordingly)12 people who ruined GreeceGreek politicians from all sides were caught red handed after years of sticking their hands in the honey pot and mismanaging the Greek economy, when default exploded in their faces.Taxes went uncollected (particularly when election time approached), foreign contracts were signed through “middle men” who shared their earnings with ministers' offshore accounts.Licenses granted within Greece, either to mobile phone operators, industries or commercial companies like IKEA would be cleared only against hefty kick backs to ministry officials from political appointees to senior public servants, via middle men.Building licenses applications would be pushed back on dusty shelves unless a substantial “facilitating payment” was handed to city planning officials.Media owners which also happen to own public works companies and football clubs would trade editorials and positive news broadcasts against awarding of juicy contracts. How To Become A Greek Oligarch In Seven Easy StepsPolitically appointed hospital directors would order medical equipment and supplies only against hefty kickbacks via middlemen. Underpaid head doctors would also be rewarded by the directors to buy their silence.Publicly administered pension and health funds were raided for years at 0% interest rate by incumbent governments, in effect transferring payments to the public budget as liabilities, financed by taxes.Those politically appointed administrators/directors, replaced after each election were selected among the most useless party cadres, which couldn’t be recycled in government, municipalities or trade unions.Through obscure procedures, children or relatives of loyal voters were rewarded with tenure jobs in the public service.And even the most popular sport was rotten to the bone: 'The only game in town?': football match-fixing in Greece ...When suddenly Greece defaulted (not being able to pay interest rates on its sovereign debt), it became obvious something needed to be done and Greece’s budget balanced.Crisis sparks backlash against Greek political graftFor decades Greeks have grudgingly tolerated a political system rife with fraud, in which top officials routinely doled out public money to special interests and were protected by laws shielding them against prosecution.The cozy political system that dominated Greece for much of the post-war era must reform itself quickly, politicians and analysts say, or risk implosion.“There has been a silent agreement between the two main parties for decades that there was no political corruption in Greece,” Virginia Tsouderou, a former deputy foreign minister and founder of the Greek branch of anti-corruption watchdog Transparency International (TI), told Reuters.“But people are so angry now that if the government does not open up and crack down on corruption there will be big trouble.”However none of the politicians accepted the responsibility for the mess they had themselves created and refused to carry the political cost for reforming Greece’s corrupt political system, defeat graft and help put the economy back on its feet.So they requested outside help which came in the form of technical committees from the IMF, the ECB and European Commission, the so called (much maligned) Troika.Among the mountain of legislation which was voted by Parliament -as had been agreed in the MoU with Greece’s creditors- a law was stealthily passed to shield the culprits: “Of Political Responsibility”, in effect a porte-manteau immunity…NYT article: New Immunity Provisions Cast Doubt on Greece’s Efforts to Fight CorruptionBy Suzanne Daley Oct. 16, 2014ATHENS — The omnibus bill, more than 100 pages long and titled “Measures of Support and Growth for the Greek Economy,” won passage here in the middle of the night in March, as Parliament raced to meet a deadline set by Greece’s creditors.Only afterwards did a legislator from the governing New Democracy party notice an unsettling provision. Buried on page 78 was language that essentially gave retroactive immunity to thousands of workers in state-funded organizations that could shield them from future corruption prosecutions.That change is among a flurry of new immunity provisions, often slipped into complex or unrelated bills this year, that have triggered outrage among law enforcement officials and critics of the government, who fear that long-awaited efforts to clamp down on corruption are being stymied.“We cannot estimate how many individuals have been saved from criminal investigations and the money it involves,” said Kostas Tzavaras, the New Democracy lawmaker who discovered the change in the penal code while flipping through the new legislation one evening in his study. “It’s billions.”Years of rampant corruption helped drive Greece to the brink of bankruptcy. Combating the problem is one of the government’s signal challenges as it tries to restore confidence that it is changing politics as usual and that the sacrifices required under its 240 billion euro, or about $305 billion, bailout are not being foisted on ordinary Greeks alone.Mr. Tzavaras, who has called for a formal investigation by the Supreme Court, is not alone in speaking out about what he sees as quiet efforts to shut down corruption investigations and possibly prevent the clawing back of ill-gotten gains. Leandros Rakintzis, the Greek inspector general, angrily chided Parliament in September for passing laws legitimizing the illegal spending of state funds.“I don’t think it is right that we spend the money to investigate only to have the laws give immunity retroactively,” he said a few days later in his Athens office. “Maybe there should be protection for political decisions. But if you stole a million dollars you should be treated like a common criminal.”In a rare public complaint, the Association of Greek Judges and Prosecutors has also condemned not only the change to the penal code in the omnibus bill but also three other new immunity provisions.One offered protections for officials who had handled disbursements from a pension fund. Another protected officials who had overseen school building expenses. The third prohibited prosecution of high-level officials who had been working in the Health Ministry but had received postgraduate study benefits.In a statement, the prosecutors said they were seeing “law change after law change” often “inconsistent, incoherent and fragmentary,” a trend that raised suspicions about whether the laws were meant to “serve purposes beyond the national interest.”The government has said that the change to the omnibus bill — the substitution of a clause — was a mistake and of no consequence to future prosecutions.A month later, it passed a new law reinstating language that had long held officials in state-funded institutions criminally liable for embezzlement, breach of trust, document falsification and bribery.But a wide range of experts and law enforcement officials in Greece agree that the retroactive immunity established by the passage of the omnibus bill still stands and remains problematic.Despite repeated queries, the Justice Ministry offered no comment. Some experts say that without some of the new immunity provisions, Greece would be unable to attract top-flight officials.“In order to get people — in many cases Greeks who have lived and worked elsewhere — to come here and take these jobs, you have to say that they will not be held responsible,” said Nicos C. Alivizatos, an expert in constitutional law at the University of Athens. “These laws are not so much to cover scandal but to allow government to function.”Others scoff at such reasoning, saying new employees were not going to be held liable for crimes committed in past years. The immunities, they say, are actually a response to the success of anticorruption task forces that have been set up in recent years to answer growing public fury over government officials on the take.Though the task forces operate on shoestring budgets, they have already had a few notable victories in a country that was rarely able to get convictions in the past.Last year, for instance, in a landmark verdict, a former Greek defense minister, Akis Tsochatzopoulos, was found guilty of setting up a complex money-laundering network to cover the trail of millions of dollars in bribes that he pocketed from government weapons purchases.Another official, Antonis Kantas, has admitted that he took so many bribes he cannot remember them all, including some that facilitated the purchase of $4 billion worth of submarines, some of which sit unfinished in a shipyard outside Athens.“What you see is the creation of mechanisms for immunity and amnesty for their own,” said Zoe Konstantopoulou, a member of Parliament from the opposition leftist Syriza party who has published a book titled “The Black Book of Shame,” calling for a change in the wide immunity that legislators have enjoyed for decades.Some law enforcement officials and government critics have said that the immunity provisions passed over the last three years go beyond even those that prosecutors have complained about publicly.They note another law protecting bankers who have issued loans to political parties and a measure saying that excess amounts of severance payments disbursed before 2011 should not be pursued.In addition, officials involved in Greece’s efforts to privatize state assets are to receive special immunities, as are members of Greece’s new Financial Stability Board, which was created to regulate how recapitalization money was allocated to Greek banks.The critics say that immunities that have always existed are being manipulated for maximum effectiveness.Parliament, for instance, must approve any effort to investigate its members, and few such permissions are ever granted. Of 89 felony cases against ministers that were sent by prosecutors to Parliament between June 2012 to May 2014, legislators voted to lift immunity only once, according to Ms. Konstantopoulou.The one case in which immunity was lifted involved the former finance minister, George Papaconstantinou, who is under investigation for his handling of the notorious Lagarde list, which identified about 2,000 Greeks who held secret Swiss bank accounts.Some experts say they believe that Mr. Papaconstantinou will escape prosecution because of yet another special statute of limitations protecting ministers: Under Greek law, after two legislative sessions, a minister can no longer be pursued for his previous actions.Law enforcement officials, who spoke on the condition of anonymity because they were not legally allowed to comment on their work, said the new immunities were making it more difficult to prosecute officials for corruption.“It means we have to find new ways to go forward with these prosecutions,” one official said. “It probably means that we have to find the money first, which can be very difficult and time consuming, and then prosecute for money laundering and tax evasion, not corruption.”https://ec.europa.eu/home-affairs/sites/homeaffairs/files/what-we-do/policies/organized-crime-and-human-trafficking/corruption/experience-sharing-programme/docs/i.androulakis_the_problem_of_political_immunities_in_greece_en.pdfTax evasion links to corruptionGreek government-debt crisis - WikipediaBefore the crisis, Greece was one of EU's worst performers according to Transparency International's Corruption Perception Index. At some time during the evolution of the crisis, it became the worst performer.One bailout condition was to implement an anti-corruption strategy; by 2017 the situation had improved, but the respective score remained near the bottom of the EU.In Greece, tax receipts were consistently below the expected level. Data for 2012 indicated that the Greek "shadow economy" or "underground economy", from which little or no tax was collected, was a full 24.3% of GDP – compared with 28.6% for Estonia, 26.5% for Latvia, 21.6% for Italy, 17.1% for Belgium, 14.7% for Sweden, 13.7% for Finland, and 13.5% for Germany. (The situation had improved for Greece, along with most EU countries, by 2017).Given that tax evasion is correlated with the percentage of working population that is self-employed, the result was predictable in Greece, where in 2013 the percentage of self-employed workers was more than double the EU average.In 2015, estimates indicated that the amount of evaded taxes stored in Swiss banks was around 80 billion euros.A mid-2017 report indicated Greeks were being "taxed to the hilt" and many believed that the risk of penalties for tax evasion were less serious than the risk of bankruptcy. One method of evasion that was continuing was the so-called "black market" or "grey economy" or "underground economy": work is done for cash payment which is not declared as income; VAT is not collected and remitted.A January 2017 report by the DiaNEOsis think-tank indicated that unpaid taxes in Greece at the time totaled approximately 95 billion euros, up from 76 billion euros in 2015, much of it was expected to be uncollectable. The same study estimated that the loss to the government as a result of tax evasion was between 6% and 9% of the country's GDP, or roughly between 11 billion and 16 billion euros per annum.So the vast clean up had to start through mandatory asset declarations, scrutiny for tax evasion and money laundering: penal offences with no statute of limitation.Declaration of Wealth and Assets - Obligations and ConsequencesIn Greek policy making, the term ‘Pothen Esches’ (i.e., how have you obtained) describes the obligation under law of all specified legal entities to declare their income and assets, and how those were obtained. The bill that was first passed in 1964—37 years after it was discussed in the Greek Parliament for the first time—is meant for preventing the embezzlement of public money and effectively combating corruption in the Greek public sector.Whom it concernsThe list of those legally obliged to submit a declaration of wealth and assets (i.e., a pothen esches) has grown longer with time. The recent (2014, 2018) amendments to the 2003 law add to the list a wide range of legal entities whose professional relationship with the public sector calls for effective and regular monitoring.Apart from the Prime Minister, members of the Government and the Parliament (both Greek and European), elected representatives in local government, judicial officers and senior bank executives, the list includes a large number of managers, officers, and employees of public organizations, committees, and legal entities governed by public law. Also, shareholders and senior executives of companies that execute public contracts or possess a broadcasting license, media publishers, journalists, financial managers of political parties, advisors to MP’s and members of the government, and many more.What it requiresAll parties specified by the law are required to submit a declaration of wealth and assets—covering the last three years before their appointment—within 90 days from taking office. Their statement must also include the assets of their spouses (even when legally separated or under a cohabitation agreement) and their underage children. In addition to immobile and mobile property, they have to declare any existing bank accounts, investment portfolios, all cash over €15.000, and valuables over €30.000 in total.From then on, their pothen esches statement must cover the year before and be submitted within three months from the day the annual period for filing their personal income statements expires. Legally obliged individuals that belong to specific categories (e.g., ministers, MP’s, mayors) are required to declare their wealth and assets for three more tax years after leaving their position.Why you should be carefulFailing to submit a declaration of wealth and assets on time or providing inaccurate or false information may result in severe penalties. After submitting the form, all legally obliged individuals are given one month to review their statement, correct any mistakes, and fill in any missing details.During the first 30 days after the deadline, a €200 fee must be paid before submitting the form. For the next 30 days, the submission fee rises to €800. After that 60-day period has passed, those who haven’t filed a declaration of wealth and assets or have provided false or inaccurate statements face imprisonment and fines up to €100.000. Concealing assets over €30.000 may lead to 2 years in prison, at least, and fines that range from €10.000 to €500.000. It must be noted that their legal spouses are equally responsible under law.State audits may be conducted any time within five years from the year of submission. All declarations of wealth and assets have to be submitted online through the related official website. Legally obliged persons must sign in with their personal Taxisnet credentials.>> Former Socialist Minister Akis Tsochatzopoulos Arrested for Money Laundering (2012)Greece would be in a far worse place today had former interior minister Akis Tsochatzopoulos been successful in his bid to become prime minister in 1996. Luckily, he only came within six votes of replacing Andreas Papandreou as leader of the socialist Pasok party. In 2013, a court sentenced Tsochatzopoulos, now 75, to life imprisonment for pocketing €55 million in kickbacks from military procurements from 1996 to 2001, when he was defense minister. His wife, ex-wife, daughter, cousin, and business associates were all implicated in the scandal, most of whom were also jailed.Tsochatzopoulos has been linked in numerous bribing, money laundering and tax evasion scandals. In early 2011, following an investigation by a specialized committee of the Hellenic Parliament, evidence emerged that Tsochatzopoulos was also involved in the Siemens scandal. Among others, the committee statement included: “Mr. Tsochatzopoulos is being checked in regards to his activities in the capacity of Minister for National Defense between 1996 and 2001. The Committee combines the orders for defense systems that occurred under his leadership with the confessions of the people managing the ‘black’ money given by Siemens as bribe for the MIM-104 Patriot systems.” In April 2011, new evidence emerged that tied Tsochatzopoulos to yet another scandal in addition to the previous two, this time with the German company Ferrostaal in relation to purchase of German submarines.>> Greece indicts 13 Germans over Siemens bribery scandal | DW | 09.03.2015>>Nine politicians indicted over declaration of wealth form | Kathimerini (2015)The parliamentary committee that inspects the so-called “pothen esches” declarations that politicians and other public servants are obliged to make annually regarding their source of wealth on Thursday indicted nine politicians to a prosecutor for not submitting those details last year.The committee indicted former administrative reform minister Antonis Manitakis as well as four ex-New Democracy MPs, three former Golden Dawn lawmakers and two mayors, of Folegandros and Metsovo, for not providing authorities last year with details of the provenance of their assets in 2015.Meanwhile, the committee made public the “pothen esches” declarations of Greece’s party leaders.A comprehensive audit of those declarations has yet to be completed due to administrative delays, officials said. But the preliminary findings made public on Thursday indicated that the party leaders’ assets in 2015 remained largely unchanged compared to the previous year.One significant change was that the declarations of Prime Minister Alexis Tsipras and the conservative New Democracy leader Kyriakos Mitsotakis were submitted jointly with those of their wives, Peristera Baziana and Mareva Grabowski respectively.>>Former Greek minister to arrested on corruption charges (2018):Former Greek defense Minister Yannos Papantoniou, has been placed in pre-trial detention and charged with corruption in relation to an arms deal signed in 2003 with French technology group Thales, a judicial source said Wednesday.The 69-year-old economist’s pre-trial detention, as well as that of his wife, on the order of an anti-corruption judge, comes after a two-day marathon testimony, which ended on Tuesday night following years of investigation.The couple, who deny the allegations, is accused of laundering 2.45 million euros in bribes in Swiss bank accounts collected in exchange for awarding Thales a contract to modernise six Greek navy frigates.>> Greece prosecutes the prosecutor investigating Novartis bribery scandalGreece seems to be the first among democratic countries in the world that prosecutes a prosecutor investigating a bribery scandal for which the Novartis made a 350-million-euro settlement with the US authorities. These are rather disturbing news that some corrupt politicians managed to get off the hook.Conclusion:the combination of mandatory asset declarations overseen by independent tax authorities, together with sweeping anti money laundering and anti tax evasion rules in whole of Europe (including Switzerland), the USA and Canada renders very difficult collection and payment of bribes. Not impossible but difficult.However recovering money hidden in tax havens has become extremely complicated as its origins must now be cleared with both banks and tax authorities.But it is a difficult fight to win…Unfortunately, a leopard doesn’t change its spots, as the saying goes. Well at least not easily.Greeks will always be individualists but when put in an environment where the Rule of Law is combined with fairness, they usually end up adapting well.Probably those who adapt best are the islanders who are usually by nature much more tolerant and compromising. 400 years of Venetian rule granted them much self rule, protection against pirates and income from their wine production.It is not surprising that one of the finest Greek statesmen was Ioannis Kapodistrias, a native of Corfu island. His task of transforming backward Ottoman provinces into a modern European state was enormous.Georges Gritsis's answer to Why does Greece now officially say that the first Greek governor Ioannis Kapodistrias was a dictator, when he was regarded positively in the past? What was the new info about him that lead to this change?“Mainlanders” and particularly Peloponnesians have a deep ingrained culture of clan and family networks which are fundamentally subversive to the Rule of Law.During the better part of the last 200 years they saw the Greek State as foreign and as coercive as the Ottoman.This is best exemplified by the first attempt at tax collection in the Southern Peloponnese by a central Greek government which resulted in the tax collectors being taken hostage and ransomed (dont laugh).Its in my view the same attitude which tolerated pillaging of EU grants and the general mismanagement of the national economy during 30 years. Ripping off the State or the EU was perceived like ripping off the Sultan.Hopefully EU benign oversight will allow an evolution for the better.Notes on financial governance issues:The PIGS (Portugal, Ireland, Greece & Spain) financial demise which plagued the Euro’s credibility had positive effects on further European integrationBrussels wins new powers over national budgets (Feb 20, 2013)The European Commission will check eurozone countries' draft budgets to verify whether they are in line with EU rules and will ask for changes if they are not, under a deal struck today (20 February) with the European Parliament, which adopted the so-called two-pack bundle of legislation.After months of wrangling, EU lawmakers backed the new powers for the Commission to further strengthen eurozone budget discipline and prevent another sovereign debt crisis.The new two-pack law complements the existing budget rules, tightened at the end of 2011 through the introduction of swifter financial sanctions for those breaking deficit and debt limits.It gives the Commission an extra level of oversight on member countries' budgets. Governments are free to ignore the commission's recommendations but risk EU legal action by doing so."These new laws are a key element in building stronger economic governance for the euro area and boosting the EU's armour against further economic crises," European Parliament President Martin Schulz said."This will mean that the euro area can benefit from a more integrated and effective policy-setting framework already for the 2014 budgetary cycle," EU Economic and Monetary Affairs Commissioner Olli Rehn said after the deal was reached.Eurozone countries already agree, in a process that takes up the first six months of the year, on where their fiscal policy should be heading the following year. The Commission makes suggestions that must be approved by governments.The new law will allow the Commission to put a country that is "threatened with financial difficulties" under strict surveillance. That means the government would be obliged to deal with the problems that led to the difficulties and be subject to quarterly progress reviews.

At a gathering of top CEOs in August last year, Prime Minister Narendra Modi, while putting forth his vision for healthcare, agriculture, infrastructure, education and poverty alleviation, said it would become a reality by 2022. When Debjani Ghosh, the then Intel India head and now President, Nasscom, said that before 2022 he would have to face another election - in 2019 - and asked if this meant he was confident of a victory, Modi replied he was giving a vision for the country's 75th year of independence.This cuts into the heart of any assessment of his government as its completes four years in power. While it has accomplished a number of challenging tasks -such as introducing Goods and Services Tax, Bankruptcy Code and big infrastructure projects - by the time Modi starts his campaign for the 2019 elections, a big chunk of his transformational agenda will still be work in progress.How Long is Long Term?Even the most strident Modi critics agree that he has avoided short-term growth fixes which, in the Indian context, usually means following loose fiscal policies, although some critics, such as former finance minister and BJP leader Yashwant Sinha, say the government has frittered away the savings from extremely low oil prices over the past four years or so. It is difficult to counter this argument as the savings have been huge indeed. Consider this: Even though crude oil and petroleum product imports rose to 268 million tonnes (MT) in 2016/17 from 219 MT in 2013/14, the money spent on this almost halved from $165 billion to $87 billion during the period due to the sharp decline in crude oil prices.But finance minister Piyush Goyal, who is standing in for an ailing Arun Jaitley, says the money saved has been well spent. For example, the government increased budgetary and extra budgetary expenditure on infrastructure from Rs4.94 lakh crore in 2017/18 to Rs5.97 lakh crore in 2018/19. There were similar sharp increases in infrastructure spending in earlier Budgets too. "This is essential when private investment is not coming in," says a top Cabinet minister. The gross fixed capital formation as per cent of GDP slipped from 33.8 per cent in 2013/14 to 30.6 per cent in 2016/17. The minister says this extra spending will ensure that the private sector investment cycle starts trending upwards in the next two years which, again, takes us beyond 2019."The government did well to diagnose the ailment. They started the treatment well. But most of the changes will require some time to show results," says Maruti Suzuki Chairman R.C. Bhargava. He says nations work in continuity but "credit needs to be given [to the government] for keeping its priorities right."The ailment he is talking about showed up in falling growth rates, high fiscal deficit/inflation, general pessimism around the economy and perception of policy paralysis. But has Modi's hyperactive governance been able to turn the tide? In quite a few areas, hardly so. Some of his flagship programmes - Make In India, Digital India, indigenous defence manufacturing and even the much-hyped Ganga rejuvenation plan - are, to say the least, looking for direction. But let's start with the areas where the government has been extremely successful - electrification and infrastructure development - and then move to things that are work in progress.Electricity for AllOne promise the government is almost certain to fulfil before it goes to the voters again is electricity for all. After connecting all villages to the power grid by March 2018, the government has announced a capital outlay of another Rs16,362 crore to connect all unelectrified 3.80 crore households by December. "Except Uttar Pradesh, I am confident that every state will be able to do it. We are working things out with the state and believe that things will start falling into place soon," says Power Minister R.K. Singh. But even if he manages to complete this daunting task in time, ensuring 24X7 supply will not be easy. The biggest hurdle will be cleaning up the debt mess that electricity distribution companies are mired in, augmentation of transmission capacity and ensuring capacity utilisation at generation units. All states, except West Bengal, have opted for the Ujjwal Discom Assurance Yojana under which state governments take debt of distribution companies on their books and promise to cut AT&C losses to 15 per cent and rationalise tariffs by eliminating the gap between the average cost of supply and the average revenue realised. The target date was 2018/19 but these goals are unlikely to have been met.Building IndiaOn May 23, during a video conference, Gujarat Chief Secretary J.N. Singh was at the receiving end for the slow pace of work on railway overbridges, which will be an integral part of the western Dedicated Freight Corridor, or DFC, connecting Delhi with Mumbai. The conference was part of the Pro-Active Governance and Timely Implementation, or PRAGATI, a forum where Modi monitors implementation of big projects. "Projects stranded for long start getting clearances just as they are listed on the agenda of PRAGATI," says Alkesh Sharma, CEO of Delhi Mumbai Industrial Corridor or DMIC. This is in contrast to the UPA days when big projects in coal, power, oil & gas, steel and roads were stuck for years due to one ministry or the other holding back on permissions. Roads and Highways Minister Nitin Gadkari says when he joined office four years back, more than 300 road projects were stuck. The public-private partnership model, under which most of these projects were awarded, had collapsed. "I sat with promoters, bankers and my colleagues to clean up the mess," he says. Gadkari turned to the hybrid annuity model, or HAM, where the NHAI gives tenders for roads on an annuity basis. After this, the project is handed over to the toll company to ensure returns, reducing risk for developers. Nearly half the new work has been allocated under HAM. "This reduces the risk of insufficient traffic," says former Road Secretary Vijay Chibber."Today the road sector is up and running," says Gadkari. His officials say work on 30,000 km of highways is on. In the last financial year, the NHAI awarded projects for 7,400 km, 70 per cent more than the 4,300 km in the previous fiscal. Construction of national highways touched an all-time high of 10,000 km in 2017/18 (28 km a day). The earlier record was 8,231 km in 2016/17. While the work to build highways is on at full swing, the financial viability of the new business model is yet to be tested. The result - if toll companies find it attractive or construction gathers pace - will be clear only with passage of time.Similarly, before moving out of the railway ministry, Suresh Prabhu pushed all DFC tenders for both Western and Eastern corridors. The trial run at the section between Ateli in Mahendragarh district of Haryana and Phulera in Rajasthan's Jaipur district has been completed. The western corridor is expected to be commissioned either by the end of 2019 or mid-2020, while the eastern DFC will take two more years. The DFCs, railways' showcase projects, were envisaged during the UPA regime, but work picked up in earnest under the current government only. These will decongest railway networks connecting Delhi with Kolkata and Delhi with Mumbai. A parallel project, the DMIC, an Indo-Japanese initiative, seeks to create a linear industrial development zone supported by the DFCs. The 1,483-km-long DMIC will connect Mumbai with Delhi and pass through 82 districts of six states (Delhi, Western Uttar Pradesh, Southern Haryana, Eastern Rajasthan, Eastern Gujarat, and Western Maharashtra). This means 17 per cent of India's area will come under the influence of this massive infrastructure development. Sharma says all land acquisition has been completed and the project is expected to be commissioned by 2022.work in ProgressOn 28, the railway ministry asked Integrated Coach Factory to scrap the global tender for 291 aluminium train-sets. The officials said the tender was not aligned with the Make In India policy under which the government plans to encourage foreign companies to build factories in the country rather than treating it as just a market. Even Suresh Prabhu's Commerce & Industry Ministry raised its objections. The Department of Industrial Policy and Promotion also said the tender conditions put domestic players at a disadvantage. Indian player Medha Servo Drives, along with its Swiss partner, Stradler were the sole bidders. Known as Train 20, it would have been Indian Railways' first modern rolling stock. As things stand today, the railways' modernisation plans are more or less grounded. This is just one example. Such lack of clarity and competing objectives have been the hallmarks of the government's Make in India campaign under which it wants to raise the share of manufacturing in the country's GDP to 25 per cent from close to 18 per cent at present.The government has also been able to do little in education. The New Education Policy, or NEP, is still in the works, and though the allocation for education fell from 4.1 per cent of the Budget in 2014/15 to 3.6 per cent in 2018/19, the government claims progress in skilling and says it has set up 527 Pradhan Mantri Kaushal Kendras in 27 states. This is significant as the Employment and Unemployment Survey 2016 had noted that 58 per cent unemployed graduates and 62 per cent unemployed post graduates said they were jobless as they were not being offered jobs worthy of their education. The NEP is with the Human Resources Development Minister Prakash Javadekar and is expected to be circulated to Cabinet members in the next fortnight. The implementation deadline will have to be beyond 2019.The country's industry has also been lagging. In the last four years, its share in GDP has risen only 80 bps to 18.1 per cent. This even as country waits for Prabhu to finalise the manufacturing policy. "The ministry has finished the draft and it has been circulated among the other stakeholder ministries. I am expecting that the new policy will come by the end of June," says Prabhu.Meanwhile, industrial capacities are hugely underutilised due to slack demand. The problems include declining competitiveness, along with disruption caused by demonetisation and GST. The average industrial growth rate during this government's regime has been a low 3.8 per cent. Prabhu believes this is work in progress and says he is not only preparing ground for existing capacities but is also pushing for manufacturing of new products. For example, he says, drone manufacturing will be a big industry in times to come. Prabhu, who doubles up as the country's civil aviation minister, has set up a committee under his deputy, Jayant Sinha, to fix the policy glitches in this area. This will need at least another few years for implementation.Exports, which have shrunk or grown in low single digits for most of the past four years, have been another disappointment. India's merchandise exports have not been able to touch the $314 billion level they had reached in 2013/14. Prabhu says he is aware of this and is looking for new markets and new products for these markets. "We are doing a market analysis of various African countries with Exim Bank to understand the demand for products. This will help us understand their needs and what we can supply," he says. He says India needs a long and medium term strategy to arrest the trend.Fast industrial progress is a must if India has to have any chance of removing rural poverty for which one of the biggest reasons is dependence of nearly half the country's population on agriculture. In developed countries, the figure is in single digits. A shift towards industry is a must if farm productivity is to rise. This brings us to our next topic - agriculture.The bumper tomato crop in Sehore, Narsinghpur and Raisen districts of Madhya Pradesh (MP) put farmers in distress as wholesale prices crashed from Rs5 a kg to Rs1 in a couple of days. In Delhi, meanwhile, policy makers were getting worried over the rising imports of tomato puree and ketchup."This is a unique paradox," explains Rajiv Kumar, Vice Chairman, NITI Aayog who recently authored a paper, which was accepted by an informal group of ministers. He provided three options to remove rural distress: Market Assurance Scheme; Price Deficiency Payment System, or PDPS, and Private Procurement and Stockist Scheme. The Madhya Pradesh government opted for a version of the PDPS to help tomato famers. These schemes will be applicable from the end of the year when the kharif crop comes to the market.Rural India has been struggling with slow agriculture growth for quite some time. In the first two years of the Modi regime, the monsoon was below normal, leading to sluggish rural wage growth. In a recent RBI working paper, 'Rural Wage Dynamics in India: What Role does Inflation Play?' Sujata Kundu says rural wages saw high growth from 2007/08 to 2012/13, followed by a significant deceleration. In the past few years, there has been zero growth. Agriculture growth had been averaging just 2 per cent during this governments regime.The NITI Aayog's draft also added that though 82 per cent of the total production is meant for sale, much is not sold in formal markets. It is assumed about 40 per cent of the surplus goes through formal channels and will require financial support. A smaller group of three ministers will work out the exact modalities of the three schemes but there is a need to connect farmers with the food processing industry. In the last Budget, Jaitley had talked about the ramping up construction of village roads, but more needs to be done to increase rural wages.The government is also pushing farmers to opt for food processing to add value to farm produce. For 120 million Indian farmers, there are only 800 farmer producer organisations or FPOs. Madhya Pradesh has 150 FPOs followed by Karanataka (120) and Maharashtra (100). Jaitley has given these units tax waivers. "I have engaged consultants to help farmers create a business model and co-opt these units," says Food Processing Minister Harsimrat Kaur BadaThe Litmus TestMany believe the government will face its biggest test in its fifth year as India's strong macroeconomic fundamentals face global headwinds. The biggest will be rising oil prices, which have touched $80 a barrel; they have been around $40 a barrel during most of this government's tenure. As this increases the country's import bill, the immediate impact will be on the current account deficit, which has already widened to more than 2 per cent of GDP from just 1.3 per cent in 2014/15. The rupee has already started falling. Both these factors will fuel inflation. Consumer price inflation is picking up pace. From last year's average of 3.6 per cent, it is expected to be around 4.6 per cent this year.

WE RECOMMENDAsus Zenfone 6 first look: An innovative flagshipHow a Sukhoi-BrahMos strike will make Pakistani airspace look like Swiss cheeseMORE FROM THE AUTHORPaying The PriceRisk OnAt a gathering of top CEOs in August last year, Prime Minister Narendra Modi, while putting forth his vision for healthcare, agriculture, infrastructure, education and poverty alleviation, said it would become a reality by 2022. When Debjani Ghosh, the then Intel India head and now President, Nasscom, said that before 2022 he would have to face another election - in 2019 - and asked if this meant he was confident of a victory, Modi replied he was giving a vision for the country's 75th year of independence.This cuts into the heart of any assessment of his government as its completes four years in power. While it has accomplished a number of challenging tasks -such as introducing Goods and Services Tax, Bankruptcy Code and big infrastructure projects - by the time Modi starts his campaign for the 2019 elections, a big chunk of his transformational agenda will still be work in progress. As for the potentially politically damaging land, labour and education reforms, well, these have not even been picked up as yet.How Long is Long Term?Even the most strident Modi critics agree that he has avoided short-term growth fixes which, in the Indian context, usually means following loose fiscal policies, although some critics, such as former finance minister and BJP leader Yashwant Sinha, say the government has frittered away the savings from extremely low oil prices over the past four years or so. It is difficult to counter this argument as the savings have been huge indeed. Consider this: Even though crude oil and petroleum product imports rose to 268 million tonnes (MT) in 2016/17 from 219 MT in 2013/14, the money spent on this almost halved from $165 billion to $87 billion during the period due to the sharp decline in crude oil prices.But finance minister Piyush Goyal, who is standing in for an ailing Arun Jaitley, says the money saved has been well spent. For example, the government increased budgetary and extra budgetary expenditure on infrastructure from Rs4.94 lakh crore in 2017/18 to Rs5.97 lakh crore in 2018/19. There were similar sharp increases in infrastructure spending in earlier Budgets too. "This is essential when private investment is not coming in," says a top Cabinet minister. The gross fixed capital formation as per cent of GDP slipped from 33.8 per cent in 2013/14 to 30.6 per cent in 2016/17. The minister says this extra spending will ensure that the private sector investment cycle starts trending upwards in the next two years which, again, takes us beyond 2019."The government did well to diagnose the ailment. They started the treatment well. But most of the changes will require some time to show results," says Maruti Suzuki Chairman R.C. Bhargava. He says nations work in continuity but "credit needs to be given [to the government] for keeping its priorities right."Click here to EnlargeThe ailment he is talking about showed up in falling growth rates, high fiscal deficit/inflation, general pessimism around the economy and perception of policy paralysis. But has Modi's hyperactive governance been able to turn the tide? In quite a few areas, hardly so. Some of his flagship programmes - Make In India, Digital India, indigenous defence manufacturing and even the much-hyped Ganga rejuvenation plan - are, to say the least, looking for direction. But let's start with the areas where the government has been extremely successful - electrification and infrastructure development - and then move to things that are work in progress.Electricity for AllOne promise the government is almost certain to fulfil before it goes to the voters again is electricity for all. After connecting all villages to the power grid by March 2018, the government has announced a capital outlay of another Rs16,362 crore to connect all unelectrified 3.80 crore households by December. "Except Uttar Pradesh, I am confident that every state will be able to do it. We are working things out with the state and believe that things will start falling into place soon," says Power Minister R.K. Singh. But even if he manages to complete this daunting task in time, ensuring 24X7 supply will not be easy. The biggest hurdle will be cleaning up the debt mess that electricity distribution companies are mired in, augmentation of transmission capacity and ensuring capacity utilisation at generation units. All states, except West Bengal, have opted for the Ujjwal Discom Assurance Yojana under which state governments take debt of distribution companies on their books and promise to cut AT&C losses to 15 per cent and rationalise tariffs by eliminating the gap between the average cost of supply and the average revenue realised. The target date was 2018/19 but these goals are unlikely to have been met.Building IndiaOn May 23, during a video conference, Gujarat Chief Secretary J.N. Singh was at the receiving end for the slow pace of work on railway overbridges, which will be an integral part of the western Dedicated Freight Corridor, or DFC, connecting Delhi with Mumbai. The conference was part of the Pro-Active Governance and Timely Implementation, or PRAGATI, a forum where Modi monitors implementation of big projects. "Projects stranded for long start getting clearances just as they are listed on the agenda of PRAGATI," says Alkesh Sharma, CEO of Delhi Mumbai Industrial Corridor or DMIC. This is in contrast to the UPA days when big projects in coal, power, oil & gas, steel and roads were stuck for years due to one ministry or the other holding back on permissions. Roads and Highways Minister Nitin Gadkari says when he joined office four years back, more than 300 road projects were stuck. The public-private partnership model, under which most of these projects were awarded, had collapsed. "I sat with promoters, bankers and my colleagues to clean up the mess," he says. Gadkari turned to the hybrid annuity model, or HAM, where the NHAI gives tenders for roads on an annuity basis. After this, the project is handed over to the toll company to ensure returns, reducing risk for developers. Nearly half the new work has been allocated under HAM. "This reduces the risk of insufficient traffic," says former Road Secretary Vijay Chibber."Today the road sector is up and running," says Gadkari. His officials say work on 30,000 km of highways is on. In the last financial year, the NHAI awarded projects for 7,400 km, 70 per cent more than the 4,300 km in the previous fiscal. Construction of national highways touched an all-time high of 10,000 km in 2017/18 (28 km a day). The earlier record was 8,231 km in 2016/17. While the work to build highways is on at full swing, the financial viability of the new business model is yet to be tested. The result - if toll companies find it attractive or construction gathers pace - will be clear only with passage of time.Similarly, before moving out of the railway ministry, Suresh Prabhu pushed all DFC tenders for both Western and Eastern corridors. The trial run at the section between Ateli in Mahendragarh district of Haryana and Phulera in Rajasthan's Jaipur district has been completed. The western corridor is expected to be commissioned either by the end of 2019 or mid-2020, while the eastern DFC will take two more years. The DFCs, railways' showcase projects, were envisaged during the UPA regime, but work picked up in earnest under the current government only. These will decongest railway networks connecting Delhi with Kolkata and Delhi with Mumbai. A parallel project, the DMIC, an Indo-Japanese initiative, seeks to create a linear industrial development zone supported by the DFCs. The 1,483-km-long DMIC will connect Mumbai with Delhi and pass through 82 districts of six states (Delhi, Western Uttar Pradesh, Southern Haryana, Eastern Rajasthan, Eastern Gujarat, and Western Maharashtra). This means 17 per cent of India's area will come under the influence of this massive infrastructure development. Sharma says all land acquisition has been completed and the project is expected to be commissioned by 2022.Click here to EnlargeWork in ProgressOn March 28, the railway ministry asked Integrated Coach Factory to scrap the global tender for 291 aluminium train-sets. The officials said the tender was not aligned with the Make In India policy under which the government plans to encourage foreign companies to build factories in the country rather than treating it as just a market. Even Suresh Prabhu's Commerce & Industry Ministry raised its objections. The Department of Industrial Policy and Promotion also said the tender conditions put domestic players at a disadvantage. Indian player Medha Servo Drives, along with its Swiss partner, Stradler were the sole bidders. Known as Train 20, it would have been Indian Railways' first modern rolling stock. As things stand today, the railways' modernisation plans are more or less grounded. This is just one example. Such lack of clarity and competing objectives have been the hallmarks of the government's Make in India campaign under which it wants to raise the share of manufacturing in the country's GDP to 25 per cent from close to 18 per cent at present. So far, except for a few mobile phone and LED units and locomotive factories being built by GE and Alstom, there are few signs that foreign companies have any serious interest in setting up manufacturing units in India in large numbers.The government has also been able to do little in education. The New Education Policy, or NEP, is still in the works, and though the allocation for education fell from 4.1 per cent of the Budget in 2014/15 to 3.6 per cent in 2018/19, the government claims progress in skilling and says it has set up 527 Pradhan Mantri Kaushal Kendras in 27 states. This is significant as the Employment and Unemployment Survey 2016 had noted that 58 per cent unemployed graduates and 62 per cent unemployed post graduates said they were jobless as they were not being offered jobs worthy of their education. The NEP is with the Human Resources Development Minister Prakash Javadekar and is expected to be circulated to Cabinet members in the next fortnight. The implementation deadline will have to be beyond 2019.The country's industry has also been lagging. In the last four years, its share in GDP has risen only 80 bps to 18.1 per cent. This even as country waits for Prabhu to finalise the manufacturing policy. "The ministry has finished the draft and it has been circulated among the other stakeholder ministries. I am expecting that the new policy will come by the end of June," says Prabhu.Meanwhile, industrial capacities are hugely underutilised due to slack demand. The problems include declining competitiveness, along with disruption caused by demonetisation and GST. The average industrial growth rate during this government's regime has been a low 3.8 per cent. Prabhu believes this is work in progress and says he is not only preparing ground for existing capacities but is also pushing for manufacturing of new products. For example, he says, drone manufacturing will be a big industry in times to come. Prabhu, who doubles up as the country's civil aviation minister, has set up a committee under his deputy, Jayant Sinha, to fix the policy glitches in this area. This will need at least another few years for implementation.Exports, which have shrunk or grown in low single digits for most of the past four years, have been another disappointment. India's merchandise exports have not been able to touch the $314 billion level they had reached in 2013/14. Prabhu says he is aware of this and is looking for new markets and new products for these markets. "We are doing a market analysis of various African countries with Exim Bank to understand the demand for products. This will help us understand their needs and what we can supply," he says. He says India needs a long and medium term strategy to arrest the trend.Fast industrial progress is a must if India has to have any chance of removing rural poverty for which one of the biggest reasons is dependence of nearly half the country's population on agriculture. In developed countries, the figure is in single digits. A shift towards industry is a must if farm productivity is to rise. This brings us to our next topic - agriculture.The bumper tomato crop in Sehore, Narsinghpur and Raisen districts of Madhya Pradesh (MP) put farmers in distress as wholesale prices crashed from Rs5 a kg to Rs1 in a couple of days. In Delhi, meanwhile, policy makers were getting worried over the rising imports of tomato puree and ketchup."This is a unique paradox," explains Rajiv Kumar, Vice Chairman, NITI Aayog who recently authored a paper, which was accepted by an informal group of ministers. He provided three options to remove rural distress: Market Assurance Scheme; Price Deficiency Payment System, or PDPS, and Private Procurement and Stockist Scheme. The Madhya Pradesh government opted for a version of the PDPS to help tomato famers. These schemes will be applicable from the end of the year when the kharif crop comes to the market.Rural India has been struggling with slow agriculture growth for quite some time. In the first two years of the Modi regime, the monsoon was below normal, leading to sluggish rural wage growth. In a recent RBI working paper, 'Rural Wage Dynamics in India: What Role does Inflation Play?' Sujata Kundu says rural wages saw high growth from 2007/08 to 2012/13, followed by a significant deceleration. In the past few years, there has been zero growth. Agriculture growth had been averaging just 2 per cent during this governments regime.The NITI Aayog's draft also added that though 82 per cent of the total production is meant for sale, much is not sold in formal markets. It is assumed about 40 per cent of the surplus goes through formal channels and will require financial support. A smaller group of three ministers will work out the exact modalities of the three schemes but there is a need to connect farmers with the food processing industry. In the last Budget, Jaitley had talked about the ramping up construction of village roads, but more needs to be done to increase rural wages.The government is also pushing farmers to opt for food processing to add value to farm produce. For 120 million Indian farmers, there are only 800 farmer producer organisations or FPOs. Madhya Pradesh has 150 FPOs followed by Karanataka (120) and Maharashtra (100). Jaitley has given these units tax waivers. "I have engaged consultants to help farmers create a business model and co-opt these units," says Food Processing Minister Harsimrat Kaur Badal.Despite the initiatives, Modi's promise to more than double farmer income in seven years - from Rs96,703 in 2015/16 to Rs2,19,724 in 2022/23 - seems doubtful given the current realities.The Litmus TestMany believe the government will face its biggest test in its fifth year as India's strong macroeconomic fundamentals face global headwinds. The biggest will be rising oil prices, which have touched $80 a barrel; they have been around $40 a barrel during most of this government's tenure. As this increases the country's import bill, the immediate impact will be on the current account deficit, which has already widened to more than 2 per cent of GDP from just 1.3 per cent in 2014/15. The rupee has already started falling. Both these factors will fuel inflation. Consumer price inflation is picking up pace. From last year's average of 3.6 per cent, it is expected to be around 4.6 per cent this year."So far, low oil prices and distance from elections have helped the government pursue a prudent policy stance. But with the situation now reversing, will the government be able to continue its focus on the trend than the cycle?" ratings agency CRISIL said in a recent report. The answer to this question will decide what lies ahead in 2019 and beyond.