Global investment guru and philanthropist George Soros said on Tuesday he was optimistic about India's economy, but cautioned against overheating that could stop high growth from sustaining. He also said India needs to be careful in courting the convertibility of the rupee on the capital account.
"You are a booming economy. However, the role of the authorities is to control it so as to avoid excessive heating. Overheating is always a concern over a period for the sustainability of growth,” Soros told industry leaders at a meeting organised by the Federation of Indian Chambers of Commerce and Industry (FICCI) and the Shri Ram Centre for Industrial Relations and Human Resources (SRC).
The man famous for his aggressive stance against the British pound sterling and other bold market gambits released his latest book, 'The Age of Fallibility: Consequence of the War on Terror’ in the capital.
“In the long run, capital control is rather harmful,” he said, but added that India should not hurry into capital account convertibility.
As Soros spoke in Delhi, Thailand's stock market tumbled and rattled regional markets including India after Bangkok curbed foreign fund inflows to keep the baht from rising. Soros asserted here that authorities must recognise the reality.
“Maintaining the exchange rate artificially for the long term is questionable,” he said.
Comparing India with China, Soros said that China was growing at faster rate but added that Beijing's government should use the current prosperity to move towards a democratic society.
Speaking on the occasion, Saroj Poddar President of FICCI said, “There are several political challenges that the world faces today and George Soros has provocative views on not only the prognosis of these challenges but how they can be overcome.”
Soros said key global concerns for the future included proliferation of nuclear weapons and a failure to take note of the impact of global warming. He also was worried that there are no international institutions to manage rule-based globalisation while markets were global.
India, he said, had a great responsibility in adhering to non-proliferation, but with states like North Korea and Iran pursuing nuclear weapons, the situation was fraught with great danger.