THAILAND, INDIA, CHINA & SOUTH KOREA WORLD’S NEW EMERGING GROWTH ENGINES

When a television colossus like CNN restructures its worldwide business coverage and re-launches one of its most popular business news features from Mumbai, it is bound to provide an insight into how the world views the Indian economy. The hour-long “Quest Means Business” special on the newly re-branded CNN-Money did not disappoint, except for the fact that very few Indians could have seen it at the pre-dawn hour of 3 o’clock on a Tuesday night in mid-February …

Content-wise, Quest Means Business provided a rich menu of India-centric comment and perspective – interviews with Arun Jaitley, American corporate honcho John Chambers of CISCO, a blue-blooded UAE minister with ambitious plans for trade with India, as well as other features on traffic congestion in Delhi and what Bombay brokers are saying about the stock market. The underlying theme throughout the focus on India was to find out whether the country would be able to take full advantage of all the positive factors currently favouring it and become the most successful emerging market in the world. As the show’s host Richard Quest said, the search was the answer to the raw question of optimism versus pessimism, scepticism and cynicism versus realism.

Perhaps India’s Finance Minister has never been interviewed by a business journalist like Richard Quest with his quixotic mannerisms, squawky voice, razor-sharp mind and witty word-play. But the host’s unique personality is what has made the show such a success. Jaitley bore up to the aggressive questioning bravely, though he was forced to admit that the atmosphere was unpredictable, volatile and challenging.

QUEST: India is the fastest growing economy in the world at 7.3% last quarter, but there are serious worries about your ability to continue that rate of growth. Worries about whether the reforms will be stalled and the country will go into reverse.

Jaitley: We are learning to live with volatility almost by the day. You have unpredictability and it’s a great challenge for economies like ours.

QUEST: Isn’t that volatility now threatening India’s growth?

JAITLEY: In the context of the whole world, we’ve been able to show resilience. We’ve been able to use the current situation to our advantage. But if I look at India in absolute terms, yes, I do believe we can do better.

QUEST: Your policies clearly have to accommodate these realities.

JAITLEY: The realities present a mixed bag. Low prices of commodities, metals and oil give us scope of savings. We can channelize those savings into the social sector, and into infrastructure. But there are also adverse global trends which impact on our exports, our markets, and currencies.

QUEST: Is the low oil price a win for India?

JAITLEY: It has certainly given us an opportunity and an advantage. But it’s also accompanied by a global mood which is adversely impacting on markets.

QUEST: Would your message to business leaders and investors be – don’t let the current environment deter you, hang on, stay the course?

JAITLEY: Well, I think we showed resilience in 2001, 2008 and 2015 to withstand many global crises. India is a much better place to invest in compared to any other economy in the world today.

The interview over, the program’s host then came out with some food for thought – “Forget BRICS, go for TICS.” India, he said, was the last remaining BRICS nation to still be afloat – Brazil and Russia are currently in recession, China is slowing down and South Africa’s economy is in turmoil. Ergo, he suggests, India should now be seen as among the TICS economies – Thailand, India, China and South Korea, new growth engines built on the back of technology and innovation.

Quest asked Chief Economist of JP Morgan, Sajjid Chinoy: Are the BRICs dead, long live the TICS?

SAJJID CHINOY: Well it is the TICS right now because India is a large commodity importer. As long as commodity prices are low, oil prices are falling, that’s a massive positive that’s driving India. But it is only a temporary windfall of income. It won’t last beyond the next year.

QUEST: So when Arun Jaitley says India’s doing well and some say this growth number is fictitious or partially illusory, what is your view?

CHINOY: Both things are true. India has been accelerating even as other emerging markets have been slowing. But a lot of this acceleration has been because of the collapse in oil prices, which is a temporary boost to growth. The challenge will be next year when all prices flatten out. Once the dividend from cheap oil goes away, other drivers of growth must kick into India.

QUEST: This whole concept of the Indian renaissance, the Make in India, the entire hype of this country being a powerhouse, I’m getting the feeling you don’t buy it?

CHINOY: You have to be a disbeliever to survive in this business. When the world has so much excess capacity and global trade is shrinking, can India become the next powerhouse in the next year or two? Unlikely. But India has to focus on all the right things and if it does, it can emerge.

QUEST: I’m not cynical but I’m slightly sceptical. The history of India is it runs a good race and slows at the final hurdle.

CHINOY: That is true but its also a fact that right now that it seems to be in mission mode. So the government can create a focal centre to push through infrastructure creation, labour reform, education, it will not matter whether that demand is consumed externally through exports or domestically in India. What matters is India becomes more competitive and productivity growth down the line will pick up even if some parts of Make in India are pushed through. But there has to be some visible progress somewhere.

QUEST: Give our viewers a feeling on the question, the raw question of optimism versus pessimism, scepticism versus cynicism, realism.

CHINOY: Well, I’m a realist. India’s has good policy and good luck. But the good luck will wear out at some point as oil prices flatten out. The government’s heart is in the right place. There’s been an intention to give a big push in public investment. And we are looking to this next budget to provide the road map for the next set of reforms that replace the dividend from oil.

Raman Swamy

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