Tuesday, May 26, 2015

Marc Faber: To achieve meaningful growth, Modi govt must curtail power of bureaucracy

This article appeared in the Forbes India magazine issue of 29 May, 2015
By Marc Faber

India is in the midst of change. One of the biggest successes India has had, compared to other nations, is that the stock markets have risen and the currency has been stable. This has less to do with Prime Minister Narendra Modi and more to do with its central bank governor Raghuram Rajan, who, I think, is the best central banker in the world.
But there has been opposition to reforms being carried out in India. The number one priority for PM Modi should be to reduce bureaucracy. Compare the situation to China where its president Xi Jinping had absolute power: He could clean up the system if he wanted to and also had the ability to do so.
Modi, however, is more like the US president. His powers are limited by the Opposition. In India, reforms have been carried out in defence, insurance and the property market, but the country has a long way to go. The climate for business is yet to improve.
Industrialists and businessmen are starting to express a bit of unease [at the pace of reforms]. There are serious question marks about growth, whether it is freight traffic or electricity production, compared with the higher growth rates of 2006-07. Sales growth and industrial production data has been poor; auto production has been down compared with 2006-07. Overall economic growth is not near the 7.5 percent which the government has been projecting.
If China and India grow by 5 to 7 percent each year, it will be fine as this is better than what the US and UK can achieve.

Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.Dr. Doom also trades currencies and commodity futures like Gold and Oil.

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