Wednesday, April 14, 2010

Water is bigger issue than inflation for India: Jim Rogers

n an interview with ET Now, investment guru Jim Rogers says that water problem is a bigger issue than inflation for India and it should also invest in infrastructure.

As an investor, would you say that the biggest risk in India today is inflation?

No. The more serious risk in India is the huge water problem that northern India has. If they do not do something about the water problem, then there would not be an India story at all but inflation is certainly one of the problems that India is facing.

It is interesting that you mentioned agriculture and also water because farm productivity is stagnant in India and now the government is getting seriously worried about it. What is the recipe?

I am happy that they are getting seriously worried about it after 50 years or 60 years or whatever it has been, but India should be one of the most productive agriculture nations in the world. You have got the land, you have got the soil, you have got the weather, everything is right for India and yet, there are so many regulations and it is almost impossible for Indian farmers to produce much less to compete with the rest of the world. Thousands of Indian farmers commit suicide every year because they cannot make a living and yet in India you should be putting America to shame with your agriculture production instead of sitting and importing food.

What is your view on Indian equities? Do you still like Sri Lanka and China better?

I am not buying either China or Sri Lanka at the moment. I am not buying equities anywhere at the moment because there had been such big run ups and cheers all over the world that I am just sitting and watching. Normally, when you have big booms over a 10- or 12-month period, it is time to sit back and do something else. So, I do not like to jump in the things after shares have gone up a lot.

Did you participate in equity markets in 2009?

Yes. I owned a lot of the Chinese shares which I bought in October-November of 2008 that was my main play and then commodities so that has been my main play. China, as you probably know, was one of the two or three best markets in the world.

What you make of the credit binge in China? Do you think that it is at all sustainable? What is the end game there?

It is not sustainable. They have been cranking out credit as fast as they possibly can, that too is always release the problems down the road. Now, China has made some mistakes. One, they are pumping out credit at a very rapid rate. Prices are starting to go up for real estate. In my view, the real estate bubbles are developing in Shanghai, Hong Kong and some of the cities in China. Now they are going to have to cut back. Nobody should have done all this huge amount of spending much of that’s credit expansion but they did and now we are going to have to pay for it.

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