Prem Watsa: I’m not worried about protectionism: Prem Watsa, President of Fairfax Financial Holdings
Talking about the current context where inflation is a problem. What is your advice to the government on how to deal with it?
First of all, you need to know what Mr. Moody did. You have to understand that because once you understand you realize that the people of India trust him to solve India’s problems. Just in terms of the pure economic policy of the average person, the average Indian citizen, when he was elected, there were approximately 18,000 villages without electricity. They all have electricity now. The scale of what he did is incredible. 400 million bank accounts mainly for poor rural people. 100 million gas cylinders. Then they have the tap water project going on now. 50% of families have tap water. The scale of this achievement for a population the size of India is truly remarkable. In the next two and a half years, 100% of the water will have tap water. I lowered inflation. This is fleeting and something the government has to work on, but Mr Modi has solved big problems in India.
If you expect inflation to cause a period of uncertainty, how long can this last?
Inflation exists in the United States and elsewhere in the world. It’s very high. The demand is there in India, but there are restrictions on the supply. No chips, for example. Inflation is a problem for the world. India has experienced massive inflation in the past. It wouldn’t be one of those I think. The RBI was keen to keep an eye on him. Interest rates will go up a bit, but India is back in spades. Economic growth is important even in Canada, the United States, and Europe. But India has a better potential for significant improvement. Inflation and higher interest rates are small factors compared to the ongoing economic growth, and in my opinion, the Modi government will work to overcome these challenges.
There are people who take this view that the government has implemented the programs that they put in place. There is also the opposite view. And this is the voice that comes into play regarding government initiatives such as digital India or privatization, and there is an opinion that promises made are not even kept…
This is because it is a democracy. You are free to say whatever you want without fear of reprisal. People who don’t like him (Modi) think he encourages nationalism and all that stuff. But look at the facts. He tried to supply electricity to 18,000 villages, tried to create 400 million bank accounts, tried to create 100 million gas cylinders and provided free health insurance to the poorest 500 million people. These are incredible accomplishments of scale. I was talking to Nandan (Nailkani) in Bangalore, Nandan says India is the only country where Aadhar is. Payment transfers in India are inexpensive. They have a digital locker. So all your information is locked and accessible. This is not available in the rest of the world. Tax collection in India runs across the border. This is because everything is digital now. There are very few places to hide. They will find out very quickly if you are trying to cheat the system. Speaking of railway stations and their privatization, I met Ashwini (Vishnau), an exceptional man. I mean the plans he shared, the architectural drawings. They are actually looking at building fifteen of them and then fifty to start with. They will eventually auction 450 to private developers.
What do you think is the greatest achievement of this government?
I left India in 1972 and went to IIT and couldn’t get a job. A socialist view of development killed India. Mr Modi’s biggest achievement has been to change that. Make it business friendly. Earlier, working in business was not a good thing. She was not admired as a businessman. You have been looked down upon for a job well done. Earning money was not a good thing. He changed that mindset. And he changed it because he himself was a huge success. think about it. The son of tea sellers. This is the hope of democracy. He gave economic freedom to the Indians. He allowed them to dream again. Your class, religion, or background doesn’t make a difference to doing well. India’s 100 Rhinos show that anything is possible in India just like North America! I think Mr. Modi will be known as the greatest statesman of our time, because of what he has done and is doing for the 1.4 billion people of India.
Now of course the other thing is about Fairfax and we were casually talking when I was in Delhi and you were talking about how much capital did you invest and how much do you want to invest?
surely. So we put in about $7 billion. We have invested about $5 billion through Fairfax India and in total we control about $7 billion in investments. And I think we’ll put in at least a lot more in the next five years. India is the best place to invest. We have to invest in a good way for everyone. Good for your employees, good for your customers, good for your shareholders. And you have to give back to the community here.
Any time frame to consider investing another $7 billion?
in the next five years. We think the opportunity is huge. Especially when the government welcomes the business. Wherever work is welcome, business will come. Many companies around the world will invest in India.
Could this $7 billion go to companies that are offered for privatization?
That could be. Some of the companies we bring may be from North America to India. There is privatization in railway stations and other sectors, and we are looking at it all.
I read on the railway station front that Fairfax is doing a pilot job?
I’d like to tell you, but this is still in its early stages. We are looking at all opportunities.
Do you have any thoughts on the new logistics policy and Shakti that focus on reducing logistics costs?
The only thing about this is that we are very close to Fedex and Fedex is looking at India and we are looking at it with them.
Could that include warehousing, warehousing, and all that?
Yes, in general terms. India is a great opportunity. So where does it make sense? We want to deal with top-tier entrepreneurs, like Madhavan Menon (President of Thomas Cook), Kamesh Goyal who built Digit from scratch, Harry Marar (CEO of Bangalore International Airport Limited), Ajit Ishak who heads Quess Corporation. These are the people who built institutions.
Are you concerned that protectionist cries from some of the major domestic industrialists could pose challenges to foreign investment?
This is exactly a wrong view. I’m not worried about this. Mr. Modi believes in competition. In the past, people with large industrial enterprises did not want to compete with the outside world. Because it’s hard to compete. But the competition is good because that’s how you get products at a competitive price, and you get better products and innovations. Where do the roads go? Where are the mining companies heading? They will all remain in India. There is almost no oil discovery in India. I was just reading about the oil industry in America. It took 25 years for one man, George Mitchell, to discover shale oil. He had the audacity for 25 years to invest money in it. America became the number one oil producer in the world. So you need to encourage entrepreneurs wherever they are. Because the country benefits. If you go to Silicon Valley, you will see people from all over the world innovating and competing.
India does not have a capital. You need capital and entrepreneurs. As Mr. Modi says, make the business environment green and welcome everyone to come to India. But India is a democracy and in a democracy people can have different views but it is the government that sets the policy and Prime Minister Modi has made India one of the best countries to invest in.