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Rediff.com  » Business » 'Indian politicians do not worry about the nation'

'Indian politicians do not worry about the nation'

September 11, 2013 08:32 IST

'After people and companies go bankrupt they come back stronger'

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A Ganesh Nadar

The politicians in India are busy taking care of themselves and their friends instead of worrying about the nation, rues James Beeland Rogers, Jr the legendary American investor and author. Currently based in Singapore, Rogers is the Chairman of Rogers Holdings and Beeland Interests, Inc. He co-founded Quantum Fund with George Soros and also created of the Rogers International Commodities Index (RICI).

He also said in 1930 the centre of the (financial) world shifted from London to the US and now it has shifted from the US to Asia. In his latest book, “Street Smarts: Adventures on the Road and in the Market” he has mauled the Indian government and also emphatically stated that, while India is the best tourist destination in the world, it is the worst country to invest in.

In a telephonic interview with Rediff.com’s deputy managing editor A Ganesh Nadar he not only defended his views on India, but also gave an insight into how he would have dealt with the problems that are plaguing India. Excerpts:

According to you the world economic crisis was badly and artificially handled by the central banks. What would have been the right way to tackle the issue?

The heads of the central banks should have allowed the situation to correct itself. When people were going bankrupt, they should have let them go bankrupt.

The banks propped up people and governments and see what happened. There was a temporary good feeling but later they realised that debt had actually increased. Banks give you money to tide over a crisis, but eventually you have to pay back.

After people and companies go bankrupt they come back stronger. Banks’ interfering worsened the situation by adding to debt. In reality they failed to solve any problem.

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Photographs: Mansi Thapliyal/Reuters

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'India should first make the currency convertible'

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You have slammed the Indian politicians for their inept handling of the economy. Tell us what they should do now.

Indian politicians are very capable of looking after themselves and their cronies. They don’t know how to look after their country.

They should first make the currency convertible. They should open up their market to countries like Australia, Germany, America and other free market economies.

While India must welcome foreign investment with open arms, Indians, too, should be allowed to invest wherever they wish to.

Politicians should eliminate subsidies to their cronies. So, how can India regain its lost glory?  The answer lies in convertible currency, free market, no barriers and no subsidies.

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Photographs: Mukesh Gupta/Reuters

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'India should make the markets stronger'

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You said that government’s move to raise import duty on gold was a bad idea. But lower gold price pushed up consumption and along with it our import bill. What would you have done under the circumstances?

Indian women buy gold because that’s the only safe investment for them. They neither trust the government, not the stock markets. We have no right to stop her from buying gold.

You should have made the markets stronger. You could have given them healthy alternatives that help them to make more money. Give them something that is more attractive than gold and has more earning potential.

India’s main imports are fuel, cooking oil and gold. Since the government cannot cut down on fuel or cooking oil they have pounced on gold. They needed a scapegoat. It is outrageous.

In the United States and Japan women do not buy gold, they invest in the market.

American and Japanese women do not love gold as much as their Indian counterparts.

So let the Indian woman buy gold till you provide her a better option. The fault lies with the government and not buyer.

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Photographs: Danish Siddiqui/Reuters
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'Fuel prices should be governed by the market'

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What if we scrapped all taxes and subsidies on fuels? What would be the impact?

Taxes boost prices and subsidies bring them down. There are distortions. Scrapping both would be an excellent idea. Scrapping subsidies will not only bring down the burden on the government, debt will not increase also. The current account deficit too won’t rise.

Fuel prices should be governed by the market. They will find their own level and that will be the best thing that can happen to the people of India.

In America when the price of fuel went up, people learned to use less fuel. They became more efficient. In India you don’t need to be efficient because the government gives you subsidies to remain inefficient. Free market prices make people efficient. Consumption will go down and the price will fall when fuels sell less.

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Photographs: Beawiharta/Reuters
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'Golden period in Indian history was when it was governed by kings'

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How can you compare Singapore, a city-state, with a country that has the second largest population in the world?

Economic policy is the same whatever the size of the nation. And when did I say that?

You were comparing Singapore’s founding father who was a dictator with India’s democracy...

Japan, Korea, China, Singapore were all one party states and they are all ahead of India. So where has democracy helped. They say a lot of bad things about the founding father (Lee Kuan Yew) in Singapore but look at the results. Singapore is now a developed nation.

You have said, “Some of the greatest periods in Indian history have been without a Democracy”. Would you care to explain?

I am not talking about the recent past I am talking about hundreds of years ago. The golden period in Indian history was when it was governed by kings. There was no democracy and no self seeking politicians.

You mean a good dictatorship is better than a bad elected government? Please tell me how making the currency convertible helps? As it is the dollar and pound are ruling sky high?

The rupee might fall even further but finally it will find its right level. It will gain in strength as the economy improves. There is no burden on the government to keep it at a particular price which is artificial anyway. And remember all the money that is pumped in to keep the rupee high is adding to the burden, debt, and deficit.

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Photographs: Vijay Mathur/Reuters

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'Let Indian farmers do what he does best'

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Finally, if you become the finance minister of India for a year, what would you do?

I will make the currency convertible in the morning, and stopped deficit spending in the afternoon. I will not allow government spending to run up debts.

I will free the economy particularly agriculture and make it competitive the world over. I will scrap all subsidies. India should be the greatest agricultural country in the world. We should be exporting food not importing it.

Let Indian farmers do what he does best, that is growing more food. Do not burden him with high fertiliser prices, land control acts and you don’t need to give him any subsidy.

Anyone can bring money and take it out. Create a favourable atmosphere so that they are keen to keep their money in India. Free market economy -- a global village is what I would aim for.

 


Photographs: Jitendra Prakash/Reuters
Tags: India

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