Terming the Budget 2017 proposals as populist, JIM ROGERS, chairman of Rogers Holdings and author of Street Smarts: Adventures on the Road and in the Markets tells Puneet Wadhwa that the Modi government has done a lot of mistakes in its tenure, including demonetisation, which was a move to give himself and his government more control. Edited excerpts:
What is your interpretation of the Budget proposals?
It was certainly a populist budget. Mr Narendra Modi knows that he has an election coming up. He certainly has heard from a lot of people and is trying to make those people feel better. The demonetisation move, even if it was a good, it was badly done. He has surely hurt a lot of people and is now trying to appeal to them. Mr Modi is doing everything he can to get votes.
Having said that, I am always in favour of tax cuts, but unfortunately in India's case, tax cuts will make the debt situation much worse. India already has very high debt-to-GDP (gross domestic product) ratio. This is one reason that India hasn't been able to do as well as it could have otherwise. So, yes everybody is in favour of infrastructure spending, and India desperately needs it, everyone is also in favour of tax cuts - including me, unfortunately the overall economic picture does not look good.
What more would you have liked to see in terms of policies for specific sectors?
Mr Modi will seek a re-election and a new term at the helm in two years from now. A big debt problem will not impact the outcome in 2019 too much. However, a big debt problem will be a problem for the Indian economy. I was very pleased to see that he is privatising the railroads more, which is a good move for the country and its economy - if it actually happens. As a result, the infrastructure will improve, and I am all for it. He should also free up the economy more and also the investment markets. It is still difficult for foreigners to invest in India. The government must realise that we do not live in 1917, but in 2017! The government does need to open up the economy more.
Do you think that the Budget has been able to assuage / calm the nerves of foreign investors, especially after the sudden demonetisation move last year?
Well, the budget will certainly appeal to investors if you cut a lot of taxes and increase infrastructure spending. More spending by the government will make the economy better - at least in the short-to-medium term. So from that point of view, investors will like it.
Would you look to invest in India now?
As for me, I don't particularly like what's going on. That's partly because the market has been going up in anticipation of budget proposals, and I do not like to buy when things are skyrocketing. I like to buy when things are down. So has the budget made things more appealing to me? The answer is no. In the past few years, I expected great things from Mr Modi, and so did the other foreign investors.
The only major positive I see is the goods and services tax (GST) bill. If implemented, it will change a lot of things on the taxation front, and that will be spectacular. That's one accomplishment that India has needed since the last 50 years. If he can actually do that, it will be good for the Indian economy.
I like India and always hope that there will be an opportunity to invest here. However, I do not have any investments here. Nearly all markets have gone up in the last couple of months. I did not invest in any markets in the last two months. I don't think I will invest in India, as the markets have run up sharply. I think Indian stock markets will correct going ahead. That apart, the government has not opened up the currency and the other markets as much as I would like.
How do you view the government's demonetisation move?
Mr Modi, in my view, has done a lot of big mistakes, including demonetisation. If governments do away with cash, it gives them more power and control. Demonetisation was a move to give himself and his government more control over you and everybody else. It was also badly executed and caused losses for many.
Do you think that the fiscal deficit targets mentioned in the budget are achievable?
That's what governments all over the world always say! Projections - be it of Indian or any other government - do not come out the way they think them to be. When it comes to debt, all governments lie.
I am not sure what Donald Trump will do next, and I am not even sure even he knows what he will do next. He has been saying a lot of things, including having trade wars. So, I suspect he will have trade wars with other economies going ahead. Trade wars have always been bad for everybody, and no one has ever won a trade war. If he does do it, it will be bad for us all - be it India or the US; everyone will suffer.
Which regions / markets are you looking to invest in now?
I am not really investing. I am still in a wait-and-watch mode. I did buy more in Russia recently. Russian government bonds have very high yields. The rouble has probably made its bottom. So I did buy more Russian government bonds. However, for the most part, I am watching if trade wars are going to erupt; and then none of us will have a good time!