WEBVTT - Episode 26: What's Holding India Back? 0:00:00.360 --> 0:00:04.200 Modi has to contend with two chambers of Parliament, twenty 0:00:04.280 --> 0:00:08.959 nine state governments, and a fiercely independent judiciary that thinks 0:00:09.000 --> 0:00:12.920 nothing of tossing out key government decisions such as who 0:00:12.960 --> 0:00:16.960 to cell phone licenses get awarded to. So, Dan, are 0:00:16.960 --> 0:00:26.400 you saying that there's maybe too much democracy in India? 0:00:27.720 --> 0:00:30.160 This episode is brought to you by Needex, the Binary 0:00:30.160 --> 0:00:33.320 Options Exchange. Binary Options let you limit your risk and 0:00:33.400 --> 0:00:36.320 trade stock in disese, commodities, forex and more from a 0:00:36.360 --> 0:00:41.120 single account. NDEX is a CFTC regulated exchange with transparency, 0:00:41.159 --> 0:00:44.920 free market data, and fairness guaranteed. The future of trading 0:00:44.960 --> 0:00:47.720 is here now at n A d e X, dot 0:00:47.800 --> 0:00:50.599 com futures, options and spots. Trading involves risk and may 0:00:50.600 --> 0:00:57.960 not be appropriate for all investors. Hi, and welcome back 0:00:57.960 --> 0:01:01.800 to Bloomberg Benchmark, a podcas pasked about the global economy. 0:01:02.080 --> 0:01:07.200 It's Thursday, February. I'm Daniel Moss, Executive editor for Global 0:01:07.280 --> 0:01:10.440 Economics in New York. I'm joined by my co host, 0:01:10.480 --> 0:01:14.680 Aki Eto, the acting Tokyo Bureau Chief. Aki Good evening, 0:01:15.040 --> 0:01:18.640 Hi Dan, how are you? I'm pretty good? Thanks. You know, 0:01:18.800 --> 0:01:21.480 we were thinking it's about time we took benchmark on 0:01:21.520 --> 0:01:26.120 the road again and talked about about India. It's often 0:01:26.200 --> 0:01:29.720 compared with China as a rising economic and political power, 0:01:29.760 --> 0:01:33.800 yet probably receives a fraction of the column inches or 0:01:33.880 --> 0:01:37.720 airtime that China gets, and when it does attract attention, 0:01:38.200 --> 0:01:41.920 it's often in the context of natural or man made disasters. 0:01:42.120 --> 0:01:46.480 And yet there's a compelling economic story to be told. Aki, 0:01:46.560 --> 0:01:49.080 you probably know India has a ton of people. It 0:01:49.200 --> 0:01:53.280 actually has almost one point three billion, and by the 0:01:53.400 --> 0:01:57.280 end of two which is not that far away, according 0:01:57.320 --> 0:01:59.640 to the u N, it will have more people than 0:01:59.760 --> 0:02:02.800 China in it. It was also the fastest growing major 0:02:02.880 --> 0:02:06.200 economy in the world last gear, clocking in at seven 0:02:06.240 --> 0:02:10.520 point three That easily beat China's six point eight percent 0:02:10.639 --> 0:02:14.079 and was streets ahead of, say, the US, which grew 0:02:14.080 --> 0:02:18.640 at about two pc. India is also a major manufacturing 0:02:18.720 --> 0:02:23.920 center for the auto industry, for engineering equipment, for electronic components. 0:02:24.240 --> 0:02:29.280 It has a huge software industry and a vibrant services sector, exporting, 0:02:29.320 --> 0:02:33.480 among other things, Bollywood. So I guess there's a lot 0:02:33.520 --> 0:02:38.160 of potential here but also some disappointment. So about two 0:02:38.240 --> 0:02:42.000 years ago, I think Prime Minister Moody was elected on 0:02:42.040 --> 0:02:46.280 a platform of economic opening and reform. His bj B 0:02:46.520 --> 0:02:49.880 party scored one of the biggest ones ever and it 0:02:49.919 --> 0:02:53.160 was a pretty exciting moment. But his administration has come 0:02:53.320 --> 0:02:56.240 under a lot of fire for really not moving fast 0:02:56.360 --> 0:03:00.280 enough on these reforms. The federal budget, which is sold 0:03:00.360 --> 0:03:03.720 for release next week, offers the chance of a reset, 0:03:03.880 --> 0:03:07.920 a chance to align policy priorities with the vision that 0:03:08.080 --> 0:03:12.400 was sold for a more productive, a more dynamic, business 0:03:12.440 --> 0:03:15.440 friendly India. It's not an easy place to govern. Let's 0:03:15.480 --> 0:03:18.000 go back in time for a moment. The election of 0:03:18.040 --> 0:03:21.840 the Modi government was a very big deal. The whole 0:03:21.880 --> 0:03:25.520 series of front page stories in big American papers, this 0:03:25.600 --> 0:03:29.359 sense that the rest of India would become like Gudge right, 0:03:29.560 --> 0:03:32.440 that's the state north of Mumbai that Modi ran as 0:03:32.520 --> 0:03:35.680 Chief minister. Chief Minister is kind of like a governor 0:03:35.720 --> 0:03:38.840 in the US. India would be open for business, the 0:03:38.920 --> 0:03:43.880 shackles would be freed, well, not so fast. Unlike China, 0:03:44.440 --> 0:03:48.320 Modi has to contend with two chambers of Parliament, twenty 0:03:48.400 --> 0:03:53.080 nine state governments, and a fiercely independent judiciary that thinks 0:03:53.120 --> 0:03:57.040 nothing of tossing out key government decisions such as who 0:03:57.080 --> 0:04:01.040 to cell phone licenses get awarded to So, Dan, are 0:04:01.080 --> 0:04:04.120 you saying that there's maybe too much democracy in India? 0:04:04.640 --> 0:04:07.480 I would never want to say there's too much democracy anywhere, 0:04:07.520 --> 0:04:10.760 but there are some things holding the country back. Joining 0:04:10.840 --> 0:04:13.560 us from our bureau in New Delhi is Uni Krishnan, 0:04:13.960 --> 0:04:18.280 who covers economics and government in India. Uni Hi Hi 0:04:18.400 --> 0:04:22.119 Dan Hiarchy, Hey, when you welcome to the show. I've 0:04:22.480 --> 0:04:27.080 heard that you've met Prime Minister Modi uh and that 0:04:27.240 --> 0:04:31.560 you've reported on his administration since its beginning in fourteen, 0:04:32.400 --> 0:04:35.880 So you know from what you see over there, has 0:04:35.880 --> 0:04:40.880 he failed relative to the expectations that were placed on him. 0:04:40.960 --> 0:04:44.320 What do you think it's been. It's been a mixed 0:04:44.360 --> 0:04:47.960 recordom and it's Bunster Moody has had a few hits 0:04:47.960 --> 0:04:51.240 and some misses. Um. I mean, if you look at 0:04:51.279 --> 0:04:54.480 the global economic map, where else in the world will 0:04:54.520 --> 0:04:57.839 you find economy that's expanding over seven percent and inflation 0:04:57.920 --> 0:05:01.880 that's moderating in a currency it's been largely stable apart 0:05:01.920 --> 0:05:05.320 from India. It's now the fastest growing economy in the world, 0:05:05.680 --> 0:05:08.240 even though relatively it's size and smaller compared to the 0:05:08.320 --> 0:05:12.200 United States or even China. But that's the good part 0:05:12.279 --> 0:05:14.480 now that's not so good. Parts so far has been 0:05:14.520 --> 0:05:19.000 the primister movie has had limited success in scrapping wasteful expenditure, 0:05:19.640 --> 0:05:22.320 something it promised when he got that historic mandate in 0:05:22.800 --> 0:05:27.880 elections in he also promised of um cutting back subsidies. 0:05:27.920 --> 0:05:31.040 These were like the large reforms that were supposed to 0:05:31.440 --> 0:05:34.200 reset the economy and put it on a on a 0:05:34.240 --> 0:05:39.960 faster growth path. He also promised scrapping leaky food distribution system. Now, 0:05:40.240 --> 0:05:44.240 remember all these are very unpopular decisions and traditionally in 0:05:44.240 --> 0:05:48.320 India governments can manage to do these things in their 0:05:48.320 --> 0:05:50.919 first few years in office, and that's what was what 0:05:51.120 --> 0:05:54.480 was expected from Prime Minister Moody because he had won 0:05:54.520 --> 0:05:56.960 the election on the development card. Now a lot of 0:05:57.000 --> 0:06:01.080 it hasn't happened. There's been something incremental step, but it's 0:06:01.080 --> 0:06:04.359 been a very slow movement. There's been There was a 0:06:04.360 --> 0:06:08.120 promise of a manistionwide sales tax that's been stuck in 0:06:08.160 --> 0:06:11.000 Parliament for over your now, so that those are the 0:06:11.000 --> 0:06:15.440 areas where he's underwhelmed. A lot of disruptive steps were expected, 0:06:15.600 --> 0:06:18.520 but what we've been witnessing over the past two years 0:06:18.760 --> 0:06:22.000 is actually incrementally changed. Ernie let's rewind the tape for 0:06:22.080 --> 0:06:26.400 two years. How did expectations get so high? And do 0:06:26.520 --> 0:06:29.560 they matter anyway? Is there a chance that when his 0:06:29.800 --> 0:06:32.640 term ends, people will look back and say some of 0:06:32.680 --> 0:06:36.559 these steps were nothing short of revolutionary. They just took 0:06:36.600 --> 0:06:40.400 a while to happen. And you know, watching the lamb 0:06:40.520 --> 0:06:44.880 sausage being made can be pretty painful, but ultimately it's 0:06:44.920 --> 0:06:48.440 the results you want to taste. And then that's part 0:06:48.480 --> 0:06:51.240 partly to whatever you said. You know, the steps step 0:06:51.320 --> 0:06:54.400 movie has been taking. He's putting a lot of money 0:06:54.440 --> 0:06:59.520 in building a highway network. He's upgrading airports, he's improving ports, 0:07:00.040 --> 0:07:04.640 basically putting a lot of money into infrastructure, creating capacity 0:07:05.080 --> 0:07:08.600 so that that's easier movement of people and goods, which 0:07:08.640 --> 0:07:13.240 is necessity for any modern, fast growing economy. He's also 0:07:13.320 --> 0:07:18.280 galganized bureaucracy, he's empowered state governments, and he's also generated 0:07:18.320 --> 0:07:22.960 a lot of money from telecom auctions and auctioning mining assets. Now, 0:07:23.000 --> 0:07:28.560 these are all steps which don't immediately in results. Um uh, 0:07:28.880 --> 0:07:33.160 you know, the consumer is going through a pain, but 0:07:33.440 --> 0:07:36.280 these are building blocks which will sustain high levels of 0:07:36.560 --> 0:07:39.360 growth in the coming years. So, like I said earlier, 0:07:39.400 --> 0:07:43.000 it's like incremental steps. There's no big bang happening here, 0:07:43.440 --> 0:07:47.239 but maybe um, five to seven years down the line, 0:07:47.920 --> 0:07:51.920 these measures that times to Marie's taking today will lead 0:07:51.960 --> 0:07:56.320 to a sustained high growth. So that's the situation on ground. 0:07:57.920 --> 0:08:01.880 So any houses played out economically, could you give us 0:08:01.920 --> 0:08:07.160 some numbers here? Yeah, So you have about growth which 0:08:07.200 --> 0:08:10.480 is about seven percent. The outlook for the next year 0:08:10.560 --> 0:08:13.960 is also, uh, the growth would be anywhere between seven 0:08:13.960 --> 0:08:17.760 to eight percent. A lot actually depends on, you know, 0:08:17.800 --> 0:08:21.760 the global external environment. So far, even though there's been 0:08:21.880 --> 0:08:25.320 a tremendous stream pain in the global economy, for India, 0:08:25.400 --> 0:08:28.440 it's actually worked to its advantage because India's a big 0:08:28.560 --> 0:08:32.280 energy inporting country and lower oil prices mean that you know, 0:08:32.400 --> 0:08:35.199 you you you spend less on oil and the input 0:08:35.240 --> 0:08:38.800 costs for for the manufacturing sector goes down. So in 0:08:38.840 --> 0:08:41.720 that sense, the growth outlook is quite positive in terms 0:08:41.760 --> 0:08:44.960 of seven percent pluss growth intension has been hovering around 0:08:44.960 --> 0:08:49.280 about five percent going forward. Governor argin Reserve Banks India 0:08:49.320 --> 0:08:52.360 governor Central Bank governor expects that it would be anywhere 0:08:52.400 --> 0:08:56.600 between about five and six percent. That's pretty manageable for 0:08:56.600 --> 0:08:59.480 a developing economy. Like India, which is going pretty fast, 0:08:59.760 --> 0:09:03.319 and and current account deficit. That's another major one for 0:09:03.440 --> 0:09:06.560 India because of the amount of imports that the economy 0:09:06.600 --> 0:09:10.120 takes and that's also been under control. And lastly, government 0:09:10.200 --> 0:09:13.400 spending in terms of fiscal deficit, you know, which which 0:09:13.520 --> 0:09:16.320 decides the ability for the government to borrow and also 0:09:16.800 --> 0:09:21.000 impacts bordering rates for the private sector. The fiscal deficit 0:09:21.080 --> 0:09:23.079 also has been under control and the government has been 0:09:23.400 --> 0:09:26.520 keeping a fairly tight cap on how it spends the money. 0:09:26.559 --> 0:09:29.680 So so far it's been the metrics in terms of 0:09:29.679 --> 0:09:34.600 actual numbers. All the macroeconomics indicators are suggesting that goth 0:09:34.600 --> 0:09:37.000 will be sustain and infliction will be under control. So 0:09:37.040 --> 0:09:39.760 now we're up to speed on the current scene in India. 0:09:40.120 --> 0:09:42.520 We'll come back and talk about what's getting in the 0:09:42.559 --> 0:09:47.200 way of India's continued economic rise, a peaceful one, even 0:09:47.400 --> 0:09:50.000 as one of its neighbors would say, First a word 0:09:50.080 --> 0:09:58.600 from our sponsor, what do traders want to limit risk? 0:09:58.720 --> 0:10:01.640 Access every opportunity and trade on a level playing field. 0:10:01.880 --> 0:10:04.480 Need x binary options let you set your maximum profit 0:10:04.520 --> 0:10:07.280 and loss before the trade, so your risk is always limited. 0:10:07.600 --> 0:10:11.080 Find opportunities in multiple markets, stock indussees commodities for X, 0:10:11.120 --> 0:10:14.840 even economic numbers and Bitcoin, all from one account and platform. 0:10:15.400 --> 0:10:18.920 Nat X is a CSTC regulated exchange with transparency, free 0:10:18.920 --> 0:10:23.319 market data and fairness guaranteed innovations of financial industry needs 0:10:23.640 --> 0:10:26.400 and need X already has. That's why we think binary 0:10:26.400 --> 0:10:29.240 options are the future of trading and it's here now 0:10:29.280 --> 0:10:32.440 at n A d e X, dot com futures options 0:10:32.440 --> 0:10:34.640 and swaps. Trading involves risk and may not be appropriate 0:10:34.640 --> 0:10:45.320 for all investors. The biggest brand created in India, That's 0:10:45.360 --> 0:10:48.280 what Prime Minister Modi has called his campaign to make 0:10:48.320 --> 0:10:53.160 India the next global manufacturing hub. Billboards from Germany to 0:10:53.280 --> 0:10:59.240 California implore make in India, Ernie. How's that campaign going? So, 0:10:59.320 --> 0:11:02.520 simply put, it's a campaign called make in India. Wherein 0:11:03.120 --> 0:11:05.680 what time Mr Movies trying to do is to create 0:11:05.720 --> 0:11:10.080 a robust manufacturing sector so that there are enough jobs 0:11:10.160 --> 0:11:13.440 for the youth. Remember, India has got a huge demographic dividend, 0:11:13.760 --> 0:11:16.680 with nearly half of its population below the age of 0:11:16.920 --> 0:11:21.560 twenty five million workers joining the workforce every month, so 0:11:21.880 --> 0:11:25.360 um attracting factory jobs is key to Prime minister modes 0:11:25.600 --> 0:11:29.800 growth plans. He's pushing to boost the share of manufacturing 0:11:30.080 --> 0:11:32.720 in the economy to a quarter. It's about eighteen percent 0:11:32.840 --> 0:11:37.000 now and he plans to put about hundred million people 0:11:37.040 --> 0:11:40.160 to work in brand new factories by twenty twenty two. 0:11:40.480 --> 0:11:44.960 So he's been going around asking global investors to set 0:11:45.040 --> 0:11:51.600 up factories, especially in focus areas like automobiles, pharmaceuticals, engineering products, 0:11:51.679 --> 0:11:55.760 electronics and defense manufacturing. India is one of the biggest 0:11:56.000 --> 0:11:59.880 importer of defense equipment UM given its issues with the 0:12:00.000 --> 0:12:03.720 ables namely Pakistan in China. So pis movie has been 0:12:03.760 --> 0:12:07.120 trying to boost the manufacturing sector and it's about like 0:12:07.600 --> 0:12:10.120 a quarter of the economy is from manufacturing in twenty 0:12:10.200 --> 0:12:13.640 twenty two and create jobs for a hundred billion people 0:12:13.679 --> 0:12:17.000 by in another seven years. So when I'm wondering what 0:12:17.040 --> 0:12:21.280 did the successes of this campaign and maybe the shortcomings 0:12:21.400 --> 0:12:25.840 of this campaign to say about Prime Minister Moodies India, 0:12:27.679 --> 0:12:29.840 Actually it's a it's a mixed support card. You know, 0:12:30.000 --> 0:12:33.800 it isn't still a very easy place to open an 0:12:33.920 --> 0:12:37.839 enterprise and run a business, but things are improving ever 0:12:37.920 --> 0:12:40.920 since times too more they took part in two thousands fourteen. 0:12:40.960 --> 0:12:45.080 He's made it improve the India's ranking in the World Bank. 0:12:45.240 --> 0:12:48.440 It's jumped for places. In the last report that had 0:12:48.480 --> 0:12:51.520 come out, it's about at higher and third position. That 0:12:51.679 --> 0:12:55.600 isn't very impressive for a country that wants to attract 0:12:56.120 --> 0:12:59.640 a law of investment and to sort of become the 0:12:59.640 --> 0:13:02.959 globe manufacturing hub. But things are improving, it's not happening 0:13:03.000 --> 0:13:05.800 fast enough. The government has a role in in most 0:13:05.800 --> 0:13:09.920 force sets of business. Things do get very bureaucratic, especially 0:13:10.000 --> 0:13:12.480 with business. There's a lot of paperwork to deal with 0:13:12.559 --> 0:13:15.760 while opening up business. But Mr movie has done some 0:13:16.440 --> 0:13:19.959 sort of self certification. You need less of PaperWorks if 0:13:19.960 --> 0:13:22.600 there were five forms needed, so now he's consolidated into 0:13:22.960 --> 0:13:27.600 one form. So he's he's putting the building blocks. Investment 0:13:27.640 --> 0:13:31.720 growth overall remains subdued, but the sentiment in terms of 0:13:31.760 --> 0:13:35.400 India is a difficult place to do business. UM is 0:13:35.480 --> 0:13:40.000 improving in terms um of the fact that foreign direct 0:13:40.040 --> 0:13:44.160 investment has increased about twenty seven percent since May two 0:13:44.160 --> 0:13:48.000 tho forty, even prying Mr Moody came to power and 0:13:48.040 --> 0:13:50.520 all this at a time when global demand was slowing. 0:13:50.640 --> 0:13:54.360 So things are improving. People are getting attracted, but he 0:13:54.400 --> 0:13:57.280 needs to possibly step on the gas in terms of 0:13:57.559 --> 0:13:59.839 make it an easier place to do business and any 0:14:00.040 --> 0:14:03.040 what are some of the institutional factors, some of the 0:14:03.120 --> 0:14:08.640 demographic factors that a single person in the term of 0:14:08.679 --> 0:14:11.680 a single government, let alone the halfway point in the 0:14:11.760 --> 0:14:17.320 first term, that anyone would struggle to address. Strength of unions, 0:14:17.360 --> 0:14:22.040 this robust sense of ownership that state governments have over 0:14:22.080 --> 0:14:25.960 their own affairs. Talk a little about that. Like you 0:14:26.040 --> 0:14:28.360 said in your opening remarks, you know, it is a 0:14:28.400 --> 0:14:32.160 difficult place to government. It's a noisy democracy, and it's 0:14:32.200 --> 0:14:35.000 got a federal structure, and it's got a state structure 0:14:35.520 --> 0:14:37.800 that a lot of things that are an exclusive domain 0:14:38.200 --> 0:14:41.760 of the state governments where where you know, the federal 0:14:41.760 --> 0:14:44.680 government doesn't have much of a role. For example, you know, 0:14:44.720 --> 0:14:46.960 I sort of foreign investor. You come here and you 0:14:47.040 --> 0:14:48.840 say that you want to set up this billion dollars 0:14:49.040 --> 0:14:52.840 cup plant. Now planets to movie can direct you to 0:14:53.400 --> 0:14:56.440 a set of states where which you would be interested, 0:14:56.520 --> 0:15:00.360 or you can or the foreign investor can decide. But 0:15:00.480 --> 0:15:05.440 beyond that, getting you know, what's the connection, getting land, 0:15:06.160 --> 0:15:11.280 getting all other clearances, the investor has to go through 0:15:11.320 --> 0:15:14.480 the state government. Now it depends on how open is 0:15:14.520 --> 0:15:17.800 that state government in terms of accepting some of the demands. 0:15:17.800 --> 0:15:19.680 So that's where the problem is. You know, Prime Minister 0:15:19.760 --> 0:15:23.680 Movie can be pretty open to business, can you know, 0:15:23.840 --> 0:15:28.120 welcome global investors. But beyond point, it is in the 0:15:28.280 --> 0:15:31.000 domain of the state government to make it an easier 0:15:31.000 --> 0:15:33.640 place to do business for the sort of global investor. 0:15:33.800 --> 0:15:37.920 So ultimately the car maker has to rely on compassionate 0:15:37.960 --> 0:15:41.480 state government to help sort out things. Primes to Movie 0:15:41.520 --> 0:15:44.400 can intervene. But unlike while he was the Chief minister 0:15:44.480 --> 0:15:46.880 in Gujab, where things were much more in his control, 0:15:47.280 --> 0:15:50.240 as a prime minister, there are certain handicaps that he 0:15:50.320 --> 0:15:53.600 has to deal with. But having said that, things are 0:15:53.680 --> 0:15:56.800 improving because you know, states are now competing for investments. 0:15:57.120 --> 0:16:00.640 Prime Minister a Movie is a shiny example of being 0:16:00.680 --> 0:16:04.200 a successful chief minister who's made a career at the 0:16:04.280 --> 0:16:07.560 national level because he could exhibit that you know, growth 0:16:07.640 --> 0:16:11.479 leads to growth necessarily is not doesn't make you unpopular. 0:16:12.040 --> 0:16:14.640 If you give growth to people, if they have higher 0:16:14.680 --> 0:16:18.160 disposable income, there's a greater chance of them voting your 0:16:18.240 --> 0:16:21.800 back in power. So the days of handouts and subsidies 0:16:21.800 --> 0:16:25.400 are over. Various chief ministers realizing that if you government 0:16:25.440 --> 0:16:28.400 of state well if you attracked for investors, people are 0:16:28.480 --> 0:16:31.480 bound to vote you back. They're not no longer looking 0:16:31.560 --> 0:16:34.120 for handouts, looking for a better life for their children, 0:16:34.720 --> 0:16:38.680 higher disposable income. So and I guess this brings us 0:16:38.720 --> 0:16:41.880 to the budget, which I heard is presented next week. 0:16:42.360 --> 0:16:44.720 When Dan originally told me that he wanted to talk 0:16:44.760 --> 0:16:49.000 about India's budget, I groaned a little bit, you know, 0:16:49.040 --> 0:16:52.240 because the budget it sounds like such a pedestrian thing. 0:16:52.320 --> 0:16:54.280 But tell us how big of a deal is a 0:16:54.440 --> 0:16:57.280 budget in India and why is it's such a big 0:16:57.280 --> 0:17:00.400 deal unlike other countries. You know, the did is a 0:17:00.400 --> 0:17:05.240 flagship event in India's economic policy making calendar. It is 0:17:05.280 --> 0:17:07.480 not just an account statement where the government comes and 0:17:07.520 --> 0:17:10.159 says that this is how much they earned last year 0:17:10.160 --> 0:17:12.959 and the samad spent here. It's more, you know, a 0:17:13.040 --> 0:17:16.320 chance for the government to present its economic vision for 0:17:16.400 --> 0:17:18.520 the for the coming year. It's also used as a 0:17:18.560 --> 0:17:23.080 launch pad for government programs, sometimes to initiate structural reforms 0:17:23.160 --> 0:17:27.120 and in some cases announced populous measure especially ahead of elections. 0:17:27.359 --> 0:17:32.680 Remember in when you when India embraced free market reforms, 0:17:32.760 --> 0:17:38.320 it started with the budget announcement. So historically, the budget 0:17:38.359 --> 0:17:44.720 has been used by prime ministers slash political parties slash 0:17:45.200 --> 0:17:49.399 leaders to showcase their best programs. So in that sense, 0:17:49.440 --> 0:17:51.720 that's the reason why it's sort of a big deal 0:17:52.040 --> 0:17:55.320 in India. There's a lot of pomp and ceremony surrounding 0:17:55.359 --> 0:17:57.880 the budget in Australia as well. I guess this must 0:17:57.960 --> 0:18:02.160 be a British legacy for both countries. Yeah, exactly. And 0:18:02.240 --> 0:18:05.360 does the Finance Minister come out of the Treasury building 0:18:05.480 --> 0:18:07.960 with a red suitcase and get into the car and 0:18:08.080 --> 0:18:11.800 drive to Parliament amidst the flashing of cameras. Yeah, the 0:18:11.840 --> 0:18:14.959 same thing happens here as well. Then, for all this 0:18:15.640 --> 0:18:18.720 and for all the issues that we've raised in this podcast, 0:18:19.280 --> 0:18:22.600 the country must be doing something right. After all, growth 0:18:22.680 --> 0:18:25.840 was the highest in the G twenty last year. Of course. 0:18:25.880 --> 0:18:27.680 I mean there are a lot of things that the 0:18:27.720 --> 0:18:30.320 government has done and there are three parts to this, 0:18:30.440 --> 0:18:33.880 you know. The first one has been the dogged approach 0:18:33.920 --> 0:18:38.000 of both the government and the Central Bank to curb 0:18:38.080 --> 0:18:43.800 inflation and resist the temptation of opening po strings and spending. 0:18:43.800 --> 0:18:47.080 You know, there's this steered clear of any kind of 0:18:47.320 --> 0:18:52.560 fiscal stimulus, even though growth was recovering. The single focus 0:18:52.640 --> 0:18:58.119 was essentially controlled inflation and fiscal deficit. Inflation has been 0:18:58.160 --> 0:19:00.680 brought to about five percent from world close to double 0:19:00.720 --> 0:19:03.760 digits two years back. The other thing, the second part 0:19:03.800 --> 0:19:07.680 of this entire development is that time Mr Moody has 0:19:07.880 --> 0:19:11.760 opened bank accounts to the poor. Um. I remember a 0:19:11.920 --> 0:19:15.480 lot of people India are living in the villages there, 0:19:15.520 --> 0:19:19.160 you know, outside the formal banking system. So he's brought 0:19:19.160 --> 0:19:22.720 them in one, he's brought them in two um to 0:19:22.760 --> 0:19:25.800 give them better access to financial products. And also it 0:19:25.920 --> 0:19:30.280 helps him transfer subsidy payments directly into their bank accounts, 0:19:30.320 --> 0:19:36.040 thereby plugging leakages, cutting out middle men, bringing down corruption. 0:19:36.359 --> 0:19:39.480 So that's been that's been the second big area where 0:19:40.080 --> 0:19:43.720 things have been done and things have gone right for 0:19:44.080 --> 0:19:47.320 Prime Mr Moody. The third is he's taken steps to 0:19:47.520 --> 0:19:52.680 attract foreign investment. He's capitalized on the positive sentiment ever 0:19:52.760 --> 0:19:55.840 since he took office after that when the global financial 0:19:55.840 --> 0:19:59.960 investors were really looking forward to parme mister Moody getting power, 0:20:00.320 --> 0:20:03.000 and he's capitalized on it. He's open certain sectors. He's 0:20:03.000 --> 0:20:08.159 opened foreign direct investment for defense manufacturing. He's increased the 0:20:08.240 --> 0:20:11.639 limit or raised the gap on foreign investment in insurance 0:20:12.119 --> 0:20:14.760 sofa on the financial sector side. Also, he's taken a 0:20:14.800 --> 0:20:18.359 couple of measures. So that's the reason why all of 0:20:18.400 --> 0:20:21.040 this has come together and you live the kind of 0:20:21.040 --> 0:20:25.480 results at a time when most of India's appears in 0:20:25.520 --> 0:20:28.240 the emerging economies backet have actually fallen off the radar. 0:20:28.920 --> 0:20:32.040 You know, Aki Tori isn't here today, but she would 0:20:32.080 --> 0:20:35.679 have loved this conversation. Heck, she may even end up 0:20:35.720 --> 0:20:39.720 working in India. Well, I think she'd like it a 0:20:39.720 --> 0:20:43.320 lot um. As our listeners know, I'm doing a three 0:20:43.320 --> 0:20:46.440 month temporary transfer to Tokyo right now and I'm really 0:20:47.000 --> 0:20:49.400 loving every single minute of it, So I bet she'd 0:20:49.440 --> 0:20:53.479 love India too. Ernie, we can't thank you enough your insight. 0:20:53.640 --> 0:20:56.960 It's great to get the flavor on the ground. Thanks 0:20:57.240 --> 0:21:00.320 thanks Jackie, and thanks to all of you for sending 0:21:00.359 --> 0:21:03.280 to Bloomberg Benchmark. We're going to be back again next week. 0:21:03.760 --> 0:21:06.159 Until then, you can find us on the Bloomberg terminal 0:21:06.240 --> 0:21:09.160 and on Bloomberg dot com, as well as on iTunes, 0:21:09.280 --> 0:21:12.760 pocket Cast, Stitcher, and Google Play. And while you're there, 0:21:12.840 --> 0:21:15.200 please take a minute to rate and review the show. 0:21:15.280 --> 0:21:17.880 Some more people can find us and let us know 0:21:17.920 --> 0:21:20.840 what you thought of the show. Ernie, our colleague in 0:21:20.840 --> 0:21:25.240 India has a Twitter handle at unique. That's pretty unique. 0:21:25.640 --> 0:21:30.280 I'm at Daniel Moss d c Aki is Akio seven 0:21:30.520 --> 0:21:34.200 and let's not forget bound for India soon at Tory stillwell, 0:21:34.320 --> 0:21:42.040 see you next week. This episode was brought to you 0:21:42.080 --> 0:21:44.680 by nate X. You know, any long term investment is 0:21:44.720 --> 0:21:47.440 going to go through short term dips and price fluctuations 0:21:47.640 --> 0:21:49.920 nat X binary options that you turn those short term 0:21:49.920 --> 0:21:53.879 movements into trading opportunities. 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