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'Democracy makes India investment destination'
From a railroad porter, to a restaurant waiter, to a broker to the greatest currency trader of our time – it has been a long journey for George Soros, Chairman, Soros Fund Management. His Quantum Fund is amongst the world’s most successful investment funds clocking returns of 30 per cent annually for over three decades.
Soros will go down in history as the man who made a billion dollars betting against the pound, as a financial genius with an uncanny ability to spot financial bubbles, as one of the financiers connected to the South-East Asian crisis and one of the pioneers of the hedge fund revolution. After a failed attempt at extracting value from India 12 years ago, Soros is back and he is betting on the democratic dividend.
In an exclusive interview with Raghav Bahl, Managing Director TV-18, George Soros speaks about various issues pertaining to investment opportunities in India.
Raghav Bahl: The obvious first question which I think a lot of people want to know is, what are you doing in India because it has been such a low profile entry?
George Soros: I have come to see India. India has now become much more important in the world both in the investment and also politically. I want to know India better.
Raghav Bahl: Some people would argue that this kind of economic euphoria could actually be misplaced that we are possibly indulging in bout of self-congratulations which may not be entirely justified, what do you say about that?
George Soros: That may well be but right now India is the flavour of the month in the world.
Raghav Bahl: Have you got your finger on why that is the case?
George Soros: It is because the growth rate of India has actually increased. There is an Indian balance where the growth in the population was more or less the same in the economy so per capita there was only one per cent increase. But now the growth has gone up to nine per cent and seems to be going higher. The population rate has declined as it has gone down below two per cent. There is big gap there which is a very dynamic situation.
Raghav Bahl: Some days ago you talked about an India-China comparison. You said that India, to you, seems a fundamentally stronger investment story than China. Is that correct?
George Soros: That is right because India is a democratic country and China is not. A growth in particular financial markets don’t grow to heaven, they usually have serious corrections. When you don’t have a good political system, if you have a financial crisis, it is liable to turn into a political crisis.
That’s what happened for instance in Indonesia. After 15 to 20 years of very high growth eventually other financial crisis turned into a political crisis. That is the danger in China because it is not a democratic country.
Raghav Bahl: Do you have anything specific that you have noticed as danger signals in China that prompts you to say that or is it a more general inference from a democratic versus non-democratic society?
George Soros: I think there is no immediate danger of any kind of political upheaval in China. But the rulers are very nervous about revolutions, maybe unduly nervous. That is a very bad development because as a result they have stopped the political opening.
Raghav Bahl: Do your investments reflect this bias within your thinking that India is stronger, are you more interested in India than in China?
George Soros: Somewhat, yes.
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