BCAS President CA Anand Bathiya’s Message for the Month of June 2025

Sayonara Tokyo; Berlin in 1000 days!

Amongst an otherwise noisy geopolitical backdrop, according to NITI Aayog CEO B.V.R. Subrahmanyam, this month, the Indian economy tip-toed itself to the 4^th spot in the leaderboard of world’s largest economies in terms of GDP: Gross Domestic Product is calculated at market terms, surpassing that of Japan and close of the heals of Germany positioned as the 3^rd spot in these rankings.

Coincidentally, India has reclaimed the 4th rank exactly 100 years after losing it to Germany in 1925. Further falling to the 6th rank at the time of Independence in 1947 to reaching a low-point of 17th rank in 1991, the Indian economy has since grown at an average rate of 6.5% per annum from 1991 to the present, progressively advancing and moving up the ranks on the global leaderboard.

Systemic intercession during the 1991 liberalisation, coupled with consistent growth-oriented policies by successive governments, a robust entrepreneurial spirit, and a largely cohesive national demeanour, has enabled India to leverage its population advantage to significantly improve its ranking among global economies.

As we commemorate and build on our overall size, our performance on Per Capita GDP remains a dismal laggard. Only a consistent performance in growth of 7.3% per annum for the next 25 years can help us reach a reasonable per capita GDP of ~$ 13,000. Such consistency of high growth will demand significant continuous interventions to enable growth as well as strategic restraints to side-step blunders over a fairly long period of time. The annals of history have yet to witness a transformation of this magnitude, and we are on the brink of a quarter-century that could redefine the future of the largest country on Earth.

As intellectuals, while we can readily enumerate numerous initiatives to achieve our full potential, a common element in all such lists would be the empowerment of our people through Education. It is only when equipped with the power of education that our workforce can advance effectively toward the dream of a developed nation. History demonstrates that civilisations prosper when they embrace inquiry, learning, and its application, the Industrial Revolution of the 1800s being the classic illustration.

As chartered accountants, we are privileged recipients of this gift of education, and we are observant witnesses to the social mobility that this course has provided to millions of us. At BCAS, the core purpose of the organisation is to facilitate the furtherance of education through various initiatives. It is at this opportune moment that with support from the family and well-wishers of our past president, Late Shri Pradyumna N. Shah, within BCAS Foundation, a new fund has been established as ‘Shri P. N. Shah CA Students’ Endowment Fund’. This fund has been established with a specific objective to provide continuous grants to deserving students pursuing the Chartered Accountancy course. We remain confident that this long-term fund with significant corpus will make a positive impact to the lives of hundreds of chartered accountancy students.

Whilst the Per Capita GDP ratio remains an absolute and real measure of our success, the route to enhanced per capita GDP travels through the GERD: Gross Expenditure on Research & Development ratio. GERD is expressed as a percentage of GDP, indicating a country’s investment in R&D relative to its overall economic output. It’s a key indicator of a country’s commitment to innovation and technological advancement, and the GERD ratio consistently precedes a higher Per Capita GDP ratio.

On a global basis over the last few decades, investment in R&D has grown sharply worldwide. Global R&D outlays nearly tripled in real terms from about $1 trillion in 2000 to $2.75 trillion by 2023. As economies have expanded, the share of R&D in world GDP has also risen from roughly 1.49% in 2000 to nearly 2.68% by 2023. This reflects a shift toward innovation-driven growth: major economies have kept or increased their R&D intensity in recent years. For example, the OECD area’s R&D intensity has held steady at about 2.7% of GDP since 2020, whereas the high R&D spenders like Israel, Korea and the US lead in both per-capita R&D and R&D/GDP by almost 2 to 3 times.

India’s R&D intensity remains among the lowest of the world’s large economies. Official data indicate that India’s gross R&D spending was 0.64% in 2020–21. In comparison, China and the European Union spend approximately 2–3%, the United States and Japan allocate around 3–4%, and Korea and Israel invest between 5–6%. Despite robust gross GDP growth, India’s low R&D investment limits its ability to reap the benefits of global innovation trends.

The lack of genuine, rigorous, evidence-supported deep research, with appropriate investments of time, effort, and funds into such projects, is a noticeable trend across various sectors in India, including areas impacting our profession. As our economy progresses and competes with strong global alternatives, it will be crucial to enhance our R&D initiatives, as “what brought us here will not take us there.”

At BCAS earlier this year, we embarked on our small journey of research-based thought leadership by collaborating with IIM-Mumbai on a multi-year research effort. Through this collaboration, this month, we are happy to announce the launch of the first Research Paper on Group Taxation: a strategic reform for simplified compliance, enhanced competitiveness, and economic growth. Through this Research Paper, BCAS aims to advocate a novel approach to the Indian Income Tax framework built on the promise of enhancing the competitiveness of Indian businesses. With the successful completion of the first research project, the IIM-Mumbai and BCAS teams have now green-flagged a second research project on ‘carry-back of tax losses – in light of the Indian context’.

Continuing the thrust on research, your Society has embarked on another Research track with NITI Aayog – India’s premier think-tank on policy and planning initiatives. The Consultative Group on Tax Policy of NITI Aayog, a specialised cohort dedicated to analysing and recommending reforms in tax policies and BCAS, have embarked on this journey to leverage the extensive technical expertise within BCAS to propose blue-sky enhancements to simplify India’s current tax and fiscal policies.

On a related note, your Society had an occasion to discuss its suggestions on the Income Tax Bill, 2025 with the Parliamentary Select Committee on Income Tax Bill, 2025. A detailed memorandum listing the suggestions on various facets of the Income Tax Bill, 2025 has been submitted to the Select Committee. We remain committed to continuing our thought-leadership initiatives around the important Income Tax Bill, 2025.