Dear Chief Minister,

Goa today constitutes an important, and in some respects unique force in the Indian and world business society and culture. In the past couple of decades, it has grown into an energetic and confident community of over 18 lakh people who have given Goa a presence in many parts of the world.

Despite the continuous and vast changes in political ideologies, economic policies and developmental issues in recent times, Goa has somehow managed to be on the progress track and its people and the government has confronted all issues with the courage, determination and with a rational outlook. To maintain the rhythm of growth and conducive development, here are few local employment centric ideas that you may like to include in your immediate action points:

• Transform Goa into a manufacturing hub in country. Based on historical facts, raise in the manufacturing will not only earn additional revenues for the State but will also create sizeable local employment. Fundamental challenge would be in successfully orienting Goa’s available labour force towards higher productivity sectors like Defence, Aerospace, Telecom, etc. Once such structural changes are brought into the system, it would directly boost economic growth of the State. Presently, majority of the Goa’s local labour force work in low-productive and informal activities. The potential for welfare improvements from the proposed structural change is immense and a proper strategy and implementation plan would help in achieving transformational goals.
• Innovation and Start-up: I feel time is just right for conducting a detailed survey in the State on innovation to capture the thoughts of industry stalwarts and other stakeholders and also to establish priority areas for promoting start-ups and innovation. It should not be limited to only IT software product and services. After all creativity is about coming up with big ideas and it can come from any sector. Innovation is all about executing the idea — converting the idea into a successful business. Thomas Edison, the greatest innovator of all time, put it well: “Innovation is 1% inspiration and 99% perspiration.” High time for you to hold special meetings and ask few pertinent questions to your ministerial leadership on how much time their respective Ministries spend on inspiration versus perspiration. What are the barriers to execution? How are they attempting to overcome them?
• Electric Vehicles (EVs) are future of mobility and energy. Mobility is going to change rapidly in the coming years as electric vehicles (EV) proliferate in country. There is a huge buzz going around the world about the Electric Vehicles (EV) revolution. Goa should gear up to examine the feasibility and capitalise on the opportunity to design a different future and reap both environmental and economic benefits with a call to action for adopting appropriate principles to converge mobility and energy for providing benefits to its citizens. Right policies, incentives and meticulous planning of associated infrastructure would be the key for driving this major and smart change in the system.
• Interlinking of rivers and smart waterways – initiate interlinking of rivers on a high priority. Once technically feasible Goa rivers are interlinked and smart waterways are created, it will provide cost effective transport system for various goods and movement of people. Smart waterways, which would have sufficient navigational depth and width, smooth bends and minimum siltation would permit navigation throughout the year at least 18 hours per day. It would ultimately reduce road congestion besides enormously improving environment conditions and help prevent deforestation. It will also solve the problem of availability of water for farming and drinking and help in generation of hydel power as well. To implement the project from concept to commissioning, there might be a possibility of getting funding assistance from the related Ministry at the Centre. Separately, you can also explore the international funding sources such as ADB, WB, DFID, among others.
• Sustainability of urban, semi-urban and rural water supply has become problematic nowadays in Goa. You should critically examine the present situation and try for more equitable technology-oriented solutions for meeting the demand. Water crisis persists in number of talukas in Goa struggling to get piped potable water. Tourism industry is also hit, as most of the hotels and commercial establishments are purchasing water from private vendors. In addition to finding local solutions, it may be a good idea to study available technologies in US and elsewhere such as desalination of water as an alternation solution to the rising concern. With the advancement in technology, these days smaller mobile desalination units are also available which can easily be installed at various locations for production and transportation of water at an affordable and cost-effective rate.
• Development of media and film city this can be a good source of revenue and employment in the State. With private sector participation, design and announce investment friendly policy statements with attractive fiscal incentive schemes which helps media and entertainment players to remain competitive in the global market.

Finally, all of us are confident that the trust placed in you by the citizens of the Goa will inspire you to continue important efforts in promoting the socio-economic development of the State, leading it on the path of prosperity, further well-being and security for the people. I personally congratulate you and convey my best wishes for your every success and wisdom in discharging the important and responsible duties of your position as the Chief Minister of Goa.

(Views are personal. Author is public policy and strategy expert and currently Founder and CEO, DPAG Consulting. He was formerly with NASSCOM)

India must have a cyber corps of ethical hackers who identify vulnerabilities and launch counter-attacks

Cyber warfare and hacking has become one of the biggest challenges today for every country. Worldwide, cyber criminals are stepping up their game and data breaches are becoming both common and devastating. Based on available information, the likely annual cost to the global economy from cyber crime is more than $400 billion. A conservative estimate would be losses of $300 billion, while the maximum could be as much as $600 billion. Even the smallest of these figures is more than the national income of most countries.

G-20 nations suffer the bulk of the losses and the losses from cyber crime for the four largest economies in the world (the US, China, Japan, and Germany) have been estimated to be to the tune of $200 billion. Low-income countries have smaller losses, but this will change as these countries increase their use of the internet and as cyber criminals move to exploit mobile platforms. Despite these alarming figures, unfortunately, most governments and companies underestimate how much risk they face from cyber crime and how quickly this risk can grow in future.

China deserves the bulk of the blame when it comes to computer-attack traffic. China accounted for over 40% of the world’s attack traffic, making the country a top source of cyber assaults. Findings of the global investigations reveal that China has set up sophisticated hacker networks across its geography. Some members are even connected to China’s military, though the extent of these official operations is unknown. When questioned, the Chinese government and its state-run media continue to deny its involvement in international hacking incidents though investigative agencies world wide keep pointing out to China. After China, the US is another home for members of some of the world’s most notorious hacker groups, accounting for nearly 10% of the global attack traffic. After China and the US, some of the other visible countries are Turkey, Russia, Taiwan, Brazil, Romania, India, Italy and Hungary. Based on reports, India accounts for nearly 2.5% of the world’s attack traffic.

While discussing the impact of these attacks on business and economy, most important cost of cyber crime, however, comes from its damage to company performance and to national economies. Cyber crime damages trade, competitiveness, innovation, and global economic growth. A company invests in research and development (R&D) to create new intellectual property (IP). They expect a certain return from their investment. If a competing product based on stolen IP appears in the market (an important qualification, as all stolen IP can be used), the expected return to the developer will be much smaller than expected.
After innovation loss, financial crime—the theft of financial assets through cyber intrusions—is the second-largest source of direct loss from cyber crime. The best data on cyber crime, unsurprisingly, comes from the financial sector.

Based on Nasscom data, globally around $114 billion is the total loss of cash in 12 months and $274 billion is the total loss of time for victims of cyber crime which means on an average 10 days were spent by victims to satisfactorily resolve hassles of cyber crime. In India, $4 billion is the total loss of cash in 12 months and with around $3.6 billion total loss of time for victims of cyber crime, an average 15 days were spent by victims to satisfactorily resolve hassles of cyber crime.
The theft of confidential business information is the third-largest cost from cyber crime and cyber espionage.

Business confidential information can be turned into immediate gain. The loss of investment information, exploration data, and sensitive commercial negotiation data can be used immediately. The damage to individual companies runs into the millions of dollars. For example, hacking of central banks or finance ministries could provide valuable economic information on the direction of markets or interest rates.
Efficient detection and handling of security incidents is a demanding and responsible task. Cyber attacks by their very nature are multi-dimensional and complex. A vast majority of cyber attacks can be damaging. To fortify national network and avert digital catastrophe, we strongly suggest the government create Indian cyber corps, a troop of ethical hacker volunteers in the country.

Once on board, the battalion of ethical hackers could be deployed all over to meticulously evaluate intruder’s threat by making attempts to break into their computer systems, something like what independent auditors do while verifying an organisation’s bookkeeping records. To gain quick results and achieve targets, they basically employ the same tools and techniques used by the intruders to investigate the security gaps, and vulnerabilities without damaging the target systems. Once the investigation process is complete, the team will report to the respective owners of the systems (government/semi-government/private) with the vulnerabilities they found and instructions on how to eliminate such security gaps.

This will have great use in future cyber wars too. In case of need, these cyber troops could penetrate enemy networks and bring them down. China reportedly has the largest number of such troopers while India lags behind. The government would be unable to create this and the only hope is an independent civilian troop of ethical hackers available to the government in times of need, whose sheer capability would deter enemy attacks. Creating them would also enhance cyber security on a massive scale as it would focus attention on creating such skills, investing in cyber security, research, etc, on a massive scale to be a deterrent. In the future, a cyber deterrent could be more valuable than a nuclear deterrent.

(Pai is chairman, Aarin Capital Partners, and Srivastava is an independent policy and strategy consultant. Views are personal)

One of the most significant moments in the history of direct tax modernisation relates to the landmark recommendations made by the task force under the leadership of Vijay Kelkar during the early years of the last decade. Keeping in mind the fundamental principles of efficiency, equity and effectiveness, the task force focused on four operational objectives, including institution of a simple and transparent system, reduction of transactions costs of tax revenue collection and compliance costs of taxpayers, alignment of incentives of taxpayers and the tax administration; and widening of the tax base.

The recommendations generated a wave in the modernisation efforts of government processes and procedures. Since then, the Department of Direct Taxes has initiated several modernisation exercises. Some noted ones are: Permanent Account Number (PAN) application receipt and processing, electronic filing of tax deducted at source, development of all-India network for e-delivery of taxpayer services, e-filing of income tax returns and a centralised processing centre (CPC) at Bangalore.

For successful implementation of most of these programmes, government procurement system and procedures have been considered a basic hurdle to achieve the objectives. To overcome challenges, several models have been tested in the past to simplify procedures. Out of many innovative models, a transaction based approach is seen to be one of the preferred ones being used in e-governance projects. Transaction based model is typically used in a situation where output can be defined, transaction volume are known and predictable and transaction volumes are tied to service provider's cost drivers. In transaction based pricing, what and how many resources are involved and how much time is taken to process the transaction while meeting the quality and service level agreement (SLA) requirements are variables typically managed by the service provider.

While the model has definite advantages of reduced technology risk and efficiency improvements, it presents unique challenges if not exercised properly. In most cases, it has been observed that officers concentrate only on the output and generally don't involve in the internal process changes and technology investments by service provider from time to time to meet SLAs. Even though there is a provision of periodic work audit in the contract, it is hardly exercised in practice.

Such an approach of monitoring simply favours service providers. As a matter of strategy, they will have a tendency to carry out intrinsic changes in the system to make the exercise of the "exit" clause difficult and unviable and create a situation wherein extension of contract becomes the only option due to fear of financial loss, possible disruption, delay or discontinuity of services to citizens.

Even in the case of a Build Own Operate and Transfer (BOOT) model, a similar situation is likely to occur. As a result, at the end of the contract period, the government may face either a "no bid" or "single bid" situation and find it extremely difficult to manage challenges posed by the prime bidder and its consortium partners or other interested group of technology and service companies, creating a situation of near-cartelisation.

Given the pace of modernisation, it is time the government takes cognisance of these facts and aggressively institutes a strict audit mechanism to safeguard its interest. It may be a good idea to introduce a system of having a mandatory panel of experts (technology and process) to assist officers in carrying regular internal audits including technology audit.

Since some large transaction based e-governance programmes are leading to the end of a contract period in less than a year or so and many more projects are yet to start following similar models, immediate action and necessary measures by the government would be most desirable to incorporate lessons and take meaningful control of various mission-mode programmes to realise its vision of effective and efficient delivery of services to citizens.

The Municipal Corporation of Delhi (MCD) took great strides in 2010 to improve its systems and processes for serving 96 per cent of population and 94 per cent of area of Delhi. Several citizen centric services were made online to improve the efficiency and bring transparency at all levels. Some of the important services are property tax, birth/death registration, issue of various licences, booking of public facilities and even sanction of building plans. After trifurcation of MCD in north, south and east Delhi Municipal Corporations in 2012 and changes in and type of CEOship , the e-governance initiative appears to have taken severe beatings.

While the noble efforts of several e-governance programmes are underway in various government organisation and urban local bodies, there are many critical lessons to be learnt from some of the projects either completed or still in progress. Records indicate that there are cases where inspite of 2nd or even 3rd phase of computerisation efforts, the desired objectives have not been met. Some of the most cited reasons for such failures being quoted are mishandling of the project and processes leading to disputes with the service provider (IT company/system integrator), neglect and apathy of government officers and hardly ever, any business process re-engineering (BPR) being carried out prior to implementation of computerisation.

Going further, in most of the e-governance programmes, manual procedures and forms are translated ‘as they are’ to computer processes leading to spate of change requests (CRs) during or after the ‘go live’ event. Service providers simply enjoy this situation as such changes fetch additional revenue to them. Interesting to note that even if they are aware of the likely changes by the virtue of their experience from other similar projects, they would purposely prefer to maintain silence at the time of award of contract. In short, the IT initiative which was undertaken as solution, itself becomes a ‘wicked problem’ (coined by Rittel and Webber in 1973) which is difficult to solve challenging bureaucratic ways of working and requiring ‘thinking capable of grasping of big pictures’ as they lack definitive formulation and are complexly linked to other problems.

Before start of any e-governance programme, one must understand that IT projects are dynamic in nature as hardware and software specified today are likely to undergo quick changes with the passage of time. In most of the cases, over a period of time, hardware either goes out of production or out of support by the Original Equipment Manufacturers (OEMs). Due to initial lack of interest and planning, departments realise that the Software Request Specifications (SRS) miss few relevant problem statements and require immediate attention. Quite often, software programmes are found not meeting the expectations of the users. As a result, CRs pile up leading to a meteoric rise in project cost and pay out to the service providers. In most of the instances, cost escalation is not acceptable to the user, sign offs get delayed, milestones are not completed and consequently the payment to the service provider is held up fully or partly. Delay in payments put the project team of the service provider in a tight corner in its company. Company withdraws the good team members, if ever assigned and replaces them with inferior team members. New members have to learn the requirements of the project and study the user departments and their processes all over again. The officials of user departments find repeated briefings to the IT project teams annoying.

The annoyance is more visible when the officials of the user department perceive it as an encroachment on their working times and subsequently make statements that project belongs to the CEO and the IT cell of the Organisation. IT cell having hardly any technical and competent personnel finds it extremely difficult to interface with service provider. The project suffers, delay creeps in, fatigue takes over, and enthusiasm dies down.

The problem is that the neither the project team nor the organisation is willing to admit failure of its IT/e-gov initiatives on the one hand and they would not be amenable to recognise dynamism of the project and ‘wickedness’ of the problem on the other. Accordingly they do not consider re-negotiation (novation and alteration) of the agreement and do not adopt spirit of mediation and conciliation in the dispute resolution which in any case would be adopted by the arbitrator/the court.

To avoid the above stated chronic problems spreading like a virus in most of modernisation programmes of ULBs, government should take quick and necessary measures to overhaul the internal systems and take a meaningful control of the situation. One of the possible actions can be in terms of redefining the responsibilities of Project Management Committee (PMC). PMC should be given sufficient freedom to innovate and invite panel of academicians, project managers and leaders from IT sector having proven track records on a market fee basis. There should not be any restriction on such appointments even if they are sourced from outside the ULB or government. The finance and law departments should extend all possible and liberal support to the recommendations of the PMC. Disputes resolution mechanism should be carefully drafted. In addition to redefining PMC, service providers should be given a strong signal in the beginning itself to take onerous responsibilities and shun their narrow adherence to jargons and practices in the name of their CMMi certifications. They should deploy dedicated resource personnel with clear understanding of government workings, procedures, weaknesses and strength. In last few words, we firmly believe that once a beginning is made in re-engineering of our own internal system and controls, our nation will definitely succeed in its stated mission of various modernisation programmes.

Television broadcasters are truly delighted at the passage of the Central Goods and Services Tax (CGST) Bill, the Integrated GST (IGST) Bill, the Compensation GST Bill and the Union Territory GST Bill 2017. They sincerely appreciate the commendable work done by finance minister Arun Jaitley and the members of the GST Council. With this, one of the biggest taxation reforms since Independence is all set to transform into a new system of indirect taxation that will not only boost GDP growth but will also create a uniform market in this country.

Yes, broadcasters believe that GST will help businesses to operate more efficiently. There are, however, a few contentious issues that television broadcasters are likely to face if not addressed before the rollout deadline on July 1. The first problematic issue relates to the clarity on the ‘location of the supplier of service’ from where a taxable supply is made.

In TV broadcasting service, the entire chain of activity is carried out from more than one state, each one being part of an integral chain of events that completes the service. For example, the programme content and commercial advertisements, including the related scheduling activities, are usually done at a central location at one place, whereas the channel playout, uplinking, etc, happen at another facility of a third-party service provider. The headends through which the channel feed is received are located across the country.

The present GST law is ambiguous and it is unclear as to from where the taxable supply is going to be made. In any event, GST, being destinationbased taxation, the final beneficiary of taxes would remain the states where the service recipient is located, irrespective of the location of supplier.

To remove the ambiguity, one of the best possible options for the government would be to consider the location of supplier of service as the place of supply from where invoices are raised. Further, the rules relating to the term ‘place of business’ should be appropriately prescribed to determine place of business in unambiguous manner. In the event it is not prescribed, it would lead to protracted litigation.

Another major issue relates to state-wise registration. The GST framework mandates state-wise registration for CGST, State GST (SGST) and IGST. State-wise registration will make it impossible to comply with certainty on account of the following ambiguities: Difficulty in ascertaining place from where service is provided: Given the seamless nature of service, it is impossible to ascertain one place of provision of service. Ambiguities will lead to significant overlapping demands with several states seeking to collect tax on the same revenue.

Payment of GST on stock transfer services: The present GST framework appears to require any stock transfer of services from one registration to another registration of the same entity to become liable to being taxed. In a service situation, it is impossible to identify the time of such transfer. Besides, the valuation for such a transfer price is not possible with television channels.

Cascading impact: The GST framework seems to mandate the collation of credits per registration. However, tax is to be paid from locations from where services are deemed to be provided. This is likely to trigger credit blockages and result in the cascading of taxes without any purpose.

Compliance nightmare: Multiple audit and assessments by overlapping jurisdictions will result in a huge increase in litigations. Compliance effort is likely to rise 400-500 times. In order to mitigate the cascading impact of taxes, a Single Pan India (SPI) registration should be allowed to the service provider (broadcaster). Also, the system should ensure that credits are collated at the centrally registered premise and such credits are allowed to be utilised or set off against the consolidated GST output liability arising at the centrally registered premise.

Once these issues are addressed during the ongoing consultations and council meetings, it will not only boost the morale of the entire television broadcast industry but it will also send a positive signal in the minds of all existing and potential investors in the media and entertainment space.

The Indian broadcasting and content distribution sector is among the fastest growing in the country. Backed by advertising and subscription revenue growth, the television industry grew by about 15% in 2015. It is expected to touch Rs 1,098 billion by 2020 from the present Rs 617 billion.

By 2019, TV households will surge to 200 million from 175 million in 2016, of which cable and satellite (C&S) homes are expected to grow from today’s 120 million to 187 million by 2019. The industry employs nearly 10 million people across the value chain. In all, it is expected to contribute Rs 30,000-35,000 crore in direct and indirect taxes by 2020.

Globally, the broadcasting and distribution sector is moving from analogue to digital. Given that the distinction between broadcasting, telecommunications and multimedia services is fast disappearing, there is a convergence not only in technology but also in carriage infrastructure and receivers. Digital technology is the major driver of convergence.

TV and radio broadcasting, cable, direct-to-home (DTH) and headend in the sky services, and similar content distribution services require large-scale investment in infrastructure: broadcast centres, studios, optical fibre network, teleports, etc. The telecom sector has grown at a tremendous pace only because the government gave it various incentives, including treating it as an ‘infrastructure service’, making it eligible for various benefits including those under Section 80-IA and Section 72A of the Income-Tax Act.

There is a need for a level-playing field so that all these benefits are extended to broadcasting services as well. Besides delivering digital TV signals, it can be effectively used to deliver broadband services and contribute to the government’s e-governance push.

Digitisation of analogue cable and satellite homes involves an investment outlay of Rs 15,000-20,000 crore. Once addressability is introduced in the cable sector by way of digitisation, these services are likely to contribute substantial revenue in the form of goods and services tax (GST) and other taxes to the exchequer because of the transparency associated with digital content distribution services.

DTH operators have already invested over Rs 15,000 crore. With the mandatory digitisation policy having come into force from April 2012, this sector would also require an additional investment of Rs 10,000-15,000 crore in the next 4-5 years for further expansion. The DTH sector will provide job opportunities to around two million people.

Like telecom, this sector — due to its inherent transparent system of accounting — will provide revenue of Rs 6,000-8,000 crore via GST and licence fees for five years, provided the industry is provided similar incentives as telecom. Hence, the broadcasting, cable and DTH sectors fulfil all eligibility criteria to qualify as ‘infrastructure services’, and these include investment criteria, creation of assets providing enduring benefits, employment criteria and contribution to the exchequer in the form of direct and indirect taxes.

All benefits and incentives available to an infrastructure industry should be extended to the broadcasting sector, including its classification as a priority sector by the Reserve Bank of India to avail finance at concessional rates of interest to boost the digitisation process, and tax holiday under Section 80-IA of the Income-Tax Act.

Further, Section 72A of the Income-Tax Act, 1961, defines the term ‘industrial undertaking’ but does not seem to cover the broadcasting industry. So, the entire broadcasting sector, including content distribution services, should also be covered under the definition of ‘industrial undertaking’, which was hitherto missing perhaps because the broadcasting industry was at that point in a nascent stage.

Given the huge investment required in the entire broadcasting and content distribution services, it is also imperative to allow carry-forward of accumulated losses in case of amalgamation or demerger.

Another critical issue where the sector needs attention is the taxability in the hands of shareholders in case of amalgamation of a foreign company holding shares in an Indian company into another foreign company. The government could consider amending the statutes to specify that similar exemption is available to shareholders as well, as it is available to shareholders in case of the merger of domestic companies which is exempt under Section 47(vii). There is also a need to lower the minimum alternate tax (MAT) rate and allow the industry to claim MAT credit for indefinite period against the existing limit of 10 years.

Once these issues are addressed, the broadcasting sector will get the much needed boost it requires. It will also send a positive signal to all potential investors considering India as a preferred destination.