July 18, 2017

Speaking at 14th National Award for Excellence in Cost Management, New Delhi

Uday Pratap Singhji, Jaydev Kala ji. Congratulations Jaydev for receiving this prestigious award; Vice President CMA, Sanjeev Gupta ji; I see a lot of familiar faces here, I may not be able to acknowledge everybody by your name. But, all the esteemed Cost and Management Accountants, ladies and gentlemen.

Awards are always a time of reflection, a time of looking back what is it that we did that we deserve this award, and it’s also a time of reflection for those who did not get an award, what it is we need to do to get an accolade, get recognition going forward. And, in some sense, awards can be a great motivator for people to excel in their work, for people to take their tasks more seriously to achieve some extraordinary results. And, therefore, I would like to at the outset congratulate each and every one of the awardees, and I have been looking at the list of companies and the process by which the awards were decided. And, it’s truly very satisfying that a very elaborate process, non-partition, extremely judicious process has gone into the selection of all the awardees, which makes earning an award today, a recognition today that much more exciting, that much more satisfying.

So, my heartiest congratulations to all the award winners today, and I wish all of you well in your work. I wish all of you well in your professions, in the duties that each one of you is carrying out. And I certainly would like to wish those who did not get an award today better tidings going forward. And I am sure, each one will go back after the award function encouraged to persevere even harder, to work for an award in the years to come.

Your institute, in fact, is an old institute – 1944, even older than our Institute of Chartered Accountants. And, extremely nice to know that the institute is quite active in a number of different activities. Sanjayji has been meeting me on number of occasions, appraising me about the activities that you do, very large base of 70,000-plus CMAs. I am told nearly 4 or 5 lakh students, and a pass percentage which is what 2000-3000 CMAs every year? My God! That’s even worse than our chartered accountants.

I remember when I did CA way back in 1987, we used to have a pass percentage of 1%, and I thought that was bad. I didn’t know somebody could be tougher than that. But, that, in fact, is the strength of the profession. The fact that it’s a very rigorous programme, it’s a programme where very high quality professionals are selected to serve business, serve industry, serve the nation. And to my mind, and here you may not like what I said, to my mind, the biggest deterrent to a much wider acceptance of the profession has been the fact that we have remained quite subdued or more in a kind of a war of words or a race with other professions rather than focusing on what we can do to differentiate ourselves and make a difference to the way business is done, to the way the country works and have an impactful presence in the country.

I have often found.let’s just take any example. Suppose, one Minister is given a particular job in a particular Ministry and another is given a job in another Ministry. Now, each one has a choice to either look down upon his Ministry and all the time think, but that would have been a better job to do or that would have been a better position to hold. Or see how we can make our own activity, our own work, whatever we may be doing. Somebody may be running a very drab, boring type of organisation, and another may be working in a flashy, very public-oriented organisation. Both organisations have their own place under the sun, it’s how you look at yourself and you look at your work. And in that sense, I would humbly submit that it’s time that the profession evolved out of a rat race. Each profession counts, everyone has a role to play, everyone will determine how important our role is going to be. Instead of being focused on what somebody else can do or whether we should be finding ourselves less competent or less empowered or we create a relevance that takes us beyond somebody else’s relevance. That’s the choice that one has to make. I know it’s not easy, it’s easier said than done. There is a lot of human element, after all, in any work that we do.

But, if you ask me, we just saw this lovely film on GST. Of course, as Arjun Ramji said, very clearly, your profession would probably be far older than the typical accountancy profession, the ‘Parta system’ that he spoke about. Truly, in India, and for that matter in any business, the costing of a product is really the most important element everybody does, whatever work we do for a outcome. In business, that outcome could be profit, in government that outcome could be good governance, in a NGO that outcome could be some service to society. Every organisation, every human being is working for an outcome, and that outcome can best be assessed in monetary  terms, in value terms. you can do any amount of business, you can run a $50-100 billion enterprise, but if your bottom line doesn’t show a profit you have no value for what work you are doing, you don’t create value, and the only way you can create value or make profits is you cost your product will.

In fact, in this day and age of GST, if I was in your shoes, I would actually make my profession the most critical and important profession on the entire business landscape, because everybody else will be doing mechanical work. Accountancy, after all, or auditing after all is only a really a job of checking the numbers, checking the trail of expenditure, working out the final profit and loss. But, you can actually help create value. Through the mechanism of efficient costing what work a CMA can do can be far greater than what work any other profession can do.

Take the case of the consumer in the GST. Frankly, the Trade and Business community has accepted and absorbed the GST framework quite well. 18 days into GST, I think all the trepidation, all the concerns that people had that this is going to disrupt business as if the world will come to an end or the sky will fall on our heads. I think that story is over now. The people of India have shown huge resilience. They have shown their capacity to absorb transformation, to absorb change, especially when that change is for the better.

So, I think the business side of it is reasonably well taken care of. But, the consumer end of GST and then, of course, business gets integrated, all stakeholders have to ultimately get aligned, can only be taken care of when the understanding of GST comes into the entire value chain, that input credits at each stage have to necessarily be passed on. Otherwise, forget removing the cascading effects of multiple taxes, GST would cause, probably, double the taxation. It would cause a greater cascading effect if people do not correctly cost their input credits, pass on that benefit, so that at the end of the value chain inflation does not rare its head, or inflation does not overtake the benefits of GST.

Let’s take a simple example. I was talking to the Chairman of a bank on Sunday, I was here on Sunday – on Saturday. And, I asked him that look you have increased your GST, earlier it was Service tax, from 15 to 18% on all your services. But, you have not reduced your basic charge for the service for the input credits which you will now get and you were not getting earlier. And, that is a universal problem, which we are finding in many places. And I am giving you this example only to show you what an important role you can play, both for consumer awareness, and for awareness in trade and business about the importance of passing on this GST credit, the input credit if we have to make it a success.

Now, the Chairman of a bank – I will not take the name – but it’s certainly one of the best banks in the country, explained to me that no, GST has been a loss for my bank. I was absolutely taken aback. He said, you know, earlier, we used to get input credit in various forms of 7.5%, and now we are getting 9%. It’s only 1.5% more, but we are paying 3% more. On the face of it, one could jolly well think that yeah, if he is getting only input credit from 7.5 to 9%. So, 1.5% additional credit. But he is paying 3% more. So, technically, or on the face of it, it sounds like he is making a loss of 1.5%.

But the reality is that he is now recovering 18% from his consumer, instead of recovering 15%, he is recovering 3% additional. They have not reduced their basic service charges by 1.5% or whatever the back calculation is, considering the input credits that they are getting. So, effectively, they have actually increased their profits by 1.5% by not changing the base value of services that they are charging customers for, while increasing the burden on the customers by 3%.

Now, this for a common customer who goes to a restaurant and has a meal, who goes to buy a garment in the store, who goes and buys may be some footwear or some decorative piece at home. For a common consumer, it’s very difficult to be able to do this costing, to be able to appreciate what is input credit, how it is costed, how it is valued. For that matter, a lot of businesses also, maybe well-meaning businesses are now passing on input credit because of the uncertainties. They are still not probably confident of what will be the input credits that they will get.

And, if you ask me, GST is one opportunity: and I am glad you celebrate July 1st as GST Day, GST is that one opportunity where other professions will become irrelevant, because the systems have been made so beautifully. The system is so much technology driven, that, gradually, people will not need consultants for any other aspect of the business, but for the costing aspect of their product, to be able to cost their product right, they will certainly need professional help, both at the institutional level – it could be trade, it could be business, it could be government or at the consumer level.

And, therefore, I would urge each one of you, let your mind expand its horizon. Don’t restrict yourself to petty turf wars. Don’t restrict yourself to only thinking of.. And it’s unfortunate, I would blame my own institute, I am a chartered accountant, just for the record so that nobody misunderstands. But, I would blame all these professionals in all these institutes for this petty wrangling that we have seen over the last 3-4-5 years, on a name, on a title, on an institute’s name, on what role each one will play, he’s good, he’s bad. There are ladies in this room so I can’t use the word, but bad mouthing is an easier word to use, bad mouthing each other in public domain, in private domain, with the government taking representations to the Ministry of Finance, to the Ministry of Corporate Affairs. What is that getting any of us?

And I would say the same thing to the chartered accountants. It’s time that we all, probably, we need to have a meeting between the 3 institutes. Sit down and resolve. We don’t need courts to resolve our issues. We need to sit down as gentlemen and adults – gentlemen and gentlewomen and adults. No offence meant. And sit down and sort out that look, everybody has a role for co-existence, everybody has a role to add value to each other. And, let’s take our own professions to the next level of engagement and service, because, truly, today, what this country needs and it needs an urgent attention, is that your 70,000 cost and management accountants immediately get down to the task of understanding every product’s costing, seeing the value chain what input credits, advising industry and business rightly what would be the impact of GST. And, most items, ladies and gentlemen, on most items, prices will come down if proper accounting and costing is done for the input credit.

I just saw in my own power sector, in the coal sector, Rakesh Kumar here from NLC Ltd. (Neyveli Lignite Corporation), within 2 or 3 days they were able to work out that Tamil Nadu alone will benefit by 508 crores and 54 lakh rupees every year in the reduction of the coal cost or power cost that NLC sells to Tamil Nadu government DISCOM, Every year Tamil Nadu and, therefore, the people of Tamil Nadu will benefit by 508 crore rupees. Thanks to GST. Overall, power sector, only NLC, one company will be reducing their billing by about 1008 crores or so.

Today, my office was working on the impact of GST in the power pricing, comes to about Rs 10,000-12,000 every year, is the saving that the power sector and, therefore, the consumer. DISCOMs when they save money, it straightaway is a benefit for the consumers of India. And this is the story in almost every sector, when you get down to detail, when you get down to realizing that this function also you will be paying a GST which you will get the full credit for… I mean whichever organization does functions. Every hotel bill, every taxi bill going forward… Yes, one will have to also have to educate business, trade and industry what will be the necessary documentation, but then that becomes a matter of habit.

So, if you go to a hotel, if you do it on business account, you will have to necessarily, maybe, give an identification by which your business can be identified. And the way the systems are being developed, and this is also going to be a evolutionary process. The systems will keep getting better and better. I mean, gradually, somebody asked me, well we will have to carry our GST No. every time we go to a restaurant and pay a bill if it’s on business account. Of course, it’s another story that when we are in high positions we put everything into the business account.

But, systems will evolve. You may possibly have to just pay by your debit or credit card or by the BHIM app, which is even simpler. And, your GSTN No. can be embedded into that, the system will read that automatically. One could possibly, maybe अर्जुन रामजी  आप  सोच  सकते   हैं  की  GSTN No हम  आधार  के  साथ  भी  लिंक  कर  सकते  हैं . तो  अब  आधार  न.  तो  लगभग  सभी  ने  स्वीकार  कर  लिया   है .

So it could be link that.There are so many ways, and we need your suggestions on that, we are hungry for ideas from all of you – how things can be done better, how things can be more seamless, how engagement between manufacturing, the distribution cycle, logistics, consumers, all of this can be made more seamless, can be made more smooth, comfortable. And, we have all heard that, ultimately, change is always beautiful at the end. Initially, there is always some resistance, there is always some pain, feels difficult.

I remember, in the days of demonetization there used to be that Whatsapp message, which some of you may have also seen. Of course, don’t believe all the Whatsapp messages, you see half of them are debunk. But, I remember that Whatsapp message which said, ‘somebody standing in a queue for a couple of hours and he’s being a little disturbed about it, and somebody else in the queue says that look, if you are not able to handle a 2-hour wait in a queue and you are uncomfortable and you are angry about it or finding it difficult. Just imagine when Prime Minister Modi is trying to change a nation of 125 crore people, how difficult that transformation, that change must be for him. And, in a way, that’s the effort and that’s the attempt that this government has continuously focused on.

I am sure many of you are aware that in the world, every government which introduced GST lost the next election. I don’t know if you are all aware of that. But, we are willing to take bold decisions, which are in national interest, which are in public interest. And, we believe that the people of India trust Prime Minister Modi and trust that when he is trying to transform this country, make it a better place to live in, a better place to do business in. We believe the people of India will support this transformation, reforms which will impact people’s lives, which will impact the destiny and future of our children. And, things like GST, things like demonetization, this big attack on black money, on corruption, this sustained effort to move the way India does business from, many cases forced dishonesty, to a formal and honest way of doing business, is something that the people of India like, specially the youth of India.

Wherever I go, wherever I engage with people, in fact, when Prime Minister Modi addressed on July 1st, the CA Foundation Day, we had tonnes and thousands of students in the hall, CA students. They were the most enthusiastic when he said, look, you are the makers of India’s destiny, let’s create an honest destiny in this country, let’s create a whole ecosystem, which is honest, which is trustworthy where people pay their taxes honestly. And the biggest cheers he got was from the youth, from the youngsters who were there in very very large numbers.

I had a problem with the jewelers when excise was introduced. I have been interacting with different trade associations, as has Meghwalji. Our experience is that wherever we went, the youngsters said, हमको  अपने  बाप  दादा  की  तरह  व्यापार  नहीं  करना  है , धंधा   नहीं  करना  है , यह  कच्चा  यह  पक्का , यह   ऑफिसियल  यह  बिल  देना  है  नहीं  देना  है . ट्रक  के  साथ  बिल्टी  जा  रही  है , अगर  रास्ते  में  चेक  पोस्ट  पर  पकड़ा  नहीं , तो  पहुँचने   के  बाद  फाड़ के  फेंक  देना  है , इनवॉइस  नंबर  फ़ोन  पर  बोल दो नया  बन  जायेगा .

We are all aware of that, aren’t we? The youth doesn’t want to do all that. Youth wants to win awards in the Institute of Cost Accountants of India for honest and good work. And we have young people like Jaydev who have come back from USA, who are trying to do an honest good business in India, on the strength of which they believe that the destiny of our people is going to be great.

We have to think with positivity, the mindset of the nation, and that mindset is changing today. I remember on many occasions when very difficult, tough decisions were required to be taken, and many of us in the government, in the cabinet would try and persuade Prime Minister Modi that we should defer a decision, maybe wait for the Gujarat election and then implement a decision and maybe wait for the UP election and then implement a decision. And, on occasions, he was alone. When the entire cabinet would think that look, we have an election right round the corner. And he would say, ‘is this in national interest?’ Yes, it is in national interest. But, no wait a minute, is it in public’s interest? प्रधानमंत्रीजी  जनता  के  हित  में  तो  है  लेकिन . लेकिन  नहीं ! अगर  यह  सही  निर्णय  है , अगर  यह  देश  हित  में  है , अगर  यह  जन  हित  में  है  तो  उसका  समय  अब  है , कल  नहीं  है ! और  अभी  निर्णय  लेंगे , आप  जनता  को  जा के  समझाओ  निर्णय  के  पीछे  हेतु  क्या  है ?

Why this decision was taken? What is in it for the country? How will it benefit the people of India? It’s our job to go and explain. And, every one of these tough decisions, the people of India have liked, the people of India have accepted, and not only that, they have supported him even more every time he took a tough decision.

For all the supposed criticism that some political leaders tried to do of demonetization, in every election after that, his popularity, the support and love and affection that Prime Minister Modi got after 8th November, has only increased from day to day. But, then all of us professionals have that role to play to ensure that good policies reach the people of India, the benefit of these policies reach the people of India. We cannot become participants to a wrong, or to a continuing wrong. And, in that sense, as Vince Lombardi, a very famous American footballer had said, ‘winning isn’t everything, it’s the will to win that is everything.’

Policies as good as they may be, will not win us the battle, unless each one of us has that commitment, has that fire that we will make sure these policies will have the desired impact, will reach the people of the country. That’s the only way we are going to be able to make change successful. All of the award winners today, I hope will be ambassadors of change, taking these high ideals by which each one of you have run your companies to your other colleagues in your industry, in your industry associations, in your locality, in your sphere of work, even beyond your sphere of work.

And, as they say, if we are trying to create history, one thing we certainly cannot do is repeat what happened in the past. Creating history is creating the new paradigm, new paradigms of growth, new paradigms of the way we do business, new paradigms of the future of the children of this country. I am very certain that each one of you and certain…. I was just reading your logo, it says at the bottom ‘तमसो  माँ  ज्योतिर्गमय’. After all, in 1944 or 1959, whenever somebody must have designed this, बहुत  सोच   समझ  के  बनाया  होगा. In some sense, I am doing your role only. I am also trying to move people from darkness to light.

In fact, if I remember correctly, when I completed one year in government, the book that I took out or my e-book which showed what work we had done, little bit of work that we were able to do. The title was ‘तमसो  माँ  ज्योतिर्गमय’.

And, if GST has to be successful, if GST has to reach the benefits to the common man, हर  सामान्य  आदमी  तक  यह  गुड  एंड  सिम्पल   टैक्स  का  अगर  लाभ  पहुंचना  है , तो  वो  रोल  मैं  समझता  हूँ  आपसे  बेहतर  और  कोई  नहीं  कर  सकेगा ! वैसे  तो  कॉस्टिंग  में , you can even calculate the cost of corruption. जिसको  हमने  पूरी  तरीके  से  कोशिश  किया  eliminate करने  की , काफी  कुछ  सफलता  भी  मिली  है . आज  कम  से  कम  दिल्ली  के  corridors पर  तो  शायद  किसी  को  आना  नहीं  पड़ता  होगा  न ! और  यह  नीचे  तक  फैलेगा , जितने   systems  transparent होंगे , जितनी  व्यवस्थाएं  सुधरेंगी , पारदर्शिता  आएगी. This will have its desired impact. Today, in Income Tax, 99% of the returns are system assessed and no notice is given, no survey, no scrutiny, no assessment is done, 99% income returns, they are accepted as they are. और  विश्वसनीयता  तो  कमानी  पड़ती  है. You have to earn the trust also of the tax department. I have very often said that if all of us professionals decide that we will become whistleblowers to anybody who is indulging in corruption. We will inform the tax authorities if somebody is evading taxes in our business, in our profession, in our trade. We can actually eliminate corruption in this country.

ताली  तो  दो  हाथ  से  ही  बजती  है  न . Unless there is a giver, there cannot be a receiver.

And, in that sense, there is a survey that comes out, which talks about how people perceive their government, how much people trust their government. There is a survey which works out the trust that people have on their government and you will all be happy to know that India ranks first in the world when it comes to trusting the government. It’s a Forbes list of countries with the most confidence, trust in their government, and the rank that India had – Rank 1 – was 73% Indians trust their government – 2016.

This is Prime Minister Modi’s impact on India. This is the impact on these series of measures starting from the first cabinet meeting, appointing an SIT to address the issue of black money and sustaining that. Benami transactions – 28-year old law, Benami properties law being made, being notified and being actually acted upon, going after the big fish, which never happened in this country before. Foreign accounts, domestic shell companies, sustained effort, and I would like to compliment Arjun Ram Meghwalji and his whole team for the outstanding work that the Ministry of Finance has done.

And, GST is a culmination of a large 3-year agenda. And, for those of you who have studied this, it would almost make it impossible to cheat on your taxes, that many safeguards they have developed in this GST system through the reverse charge mechanism, through the mechanism of giving credit only when the tax is actually paid. There are various safeguards which have been brought into this system. But, we would urge you to be those ambassadors who take this message to the people, who study that proper costing is done and input credits are passed on. It’s only then that GST can be successful. And, after all, when the people of the country trust Prime Minister

मोदी , मुझे  नहीं  लगता  और  कोई  सर्वे  में,  और  कोई  मापदंड  में  भारत  नंबर  one   आता  होगा . But trust in the government पर  नंबर  one आना  अपने  आप  में  एक  बहुत  बड़ा  कीर्तिमान  है . It’s a huge thumbs up for India.

Canada ranks second with 62% by the way, it’s a large gap. Australia ranks 7th with 45%.  You know all this time, we have looked down upon ourselves. हमें  ऐसा  लगता  है  जैसे  यह  विदेश  और  पश्चिमी  देश  वगैरा  यह  बहुत  ही  अच्छे  हैं , सब  कुछ  वहां  पर  बहुत  अच्छा  है . पर  भारत  भी  अच्छी  चीज़ें  कर  सकता  है . There is no country in the world which has attempted such a transformational thing like GST in a country with 29 states, 7 Union Territories, 1.25 billion people, no other country in the world who has embarked on such a massive transformational exercise. And so seamlessly, because the people trust, that trust will be incomplete but for your support, your dedication, your involvement to make GST successful, to reach the benefits of GST to the last man at the bottom of the pyramid to ensure proper input tax credits are passed on, to ensure that businesses and sectors in the country are assessed carefully and the people are made aware that Goods should come down even when the GST is charged, and most goods you will find, because of the cascading effect of taxes being now eliminated finally, will even become more export competitive going forward.

So, I think the Institute of Chartered Accountants has a great role to play. For you, it should be taken up not only as a profession, but I would urge each one of you to look at it as a mission. And once we take this up as a mission, there is no power on earth which can stop our profession. I remember when I finished my CA, I was very keen to do CS and ICWA as it was called also soon thereafter, but my mother put her foot down. She said इतना  बड़ा  चश्मा  पहनते  हो , तब  तो  लेन्सेस  भी  बड़ी  मोटी  मोटी  होती  थी. She refused to allow me to even pursue Cost and Works Accountants and Company Secretary course की  अँधा  हो  जायेगा  जब  तक  यह  ख़त्म  करेगा . पर  तब  शायद  मैंने  पढ़ा  नहीं  था  तमसो  माँ  ज्योतिर्गमय , नहीं  तो  झगड़ा  करके  कर  ही  लेता .

बहुत  बहुत  धन्यवाद् , आप  सबको  मेरी  बहुत  बहुत  शुभकामनाएं . And a big congratulations to all of you.



Next Speech

July 16, 2017 Speaking at Slum Yuva Daud at New Delhi

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