World Champion Viswanathan Anand has been attending the World Economic Forum in Davos, Switzerland and gave his impressions in a short video. Dr. Kenneth Rogoff, an American Grandmaster as well as top economist, was interviewed and gave his impression about his interactions with Indian politicians and business executives. While Rogoff didn’t meet the Indian star, he was able to chat with him briefly on the phone. He also commented on India’s financial situation:
Of course, many outside commentators view India’s financial regulation as repressive, effectively forcing banks to hold massive quantities of government debt. Of course, given how many of the United States financial institutions are doing that voluntarily right now, and that the U.S. public-debt-to-GDP ratio may rival India’s in a few years (according to Reinhart and Rogoff’s research), there are fewer critiques coming from abroad right now.
Walking around the room and polling quite a few people, I came up with a “Davos India dinner consensus” forecast of 6 percent to 7 percent for India’s 2009 growth, a remarkable figure in a year where the most developed countries are expected to have negative growth, and where world growth will struggle to reach 1 percent.
My own guess is that despite the fact the fact that India is relatively closed, things won’t be quite that good, and a growth rate of 4 percent 5 percent is more realistic. Everyone agreed that direct foreign investment into India had slowed dramatically, removing a key source of equity capital in the Indian economy.
He basically said that India has a tightly-controlled financial market and the optimism may be overstated. India has also had to prop up their businesses and banks because of credit issues. The growth brought on by the outsourcing boom has slowed. This may have also been influenced by increasing wages in India. Anand in his observations stated that most of what he heard amounted to a consensus on issues of policy, economics and environment. He was particularly enthralled by some speakers from Malawi.
Viswanathan Anand at the World Economic Forum in Switzerland.