Click to play videoForbes, the international business magazine, launches in India on Thursday. The magazine's Editor-in-Chief Steve Forbes said he was excited to be in India, especially after the outcome of the General Elections.
“I would like to say that we timed this just precisely for the [election] uptick,” he said.
“Clearly India’s future is enormous even though we are in a global slowdown right now, we will eventually recover and India will be part of that global recovery,” Forbes said, adding, “India will be one of the global leaders after the financial crisis ends.”
Forbes launches in India in collaboration with the Raghav Bahl-promoted Network18 group.
Network 18, Managing Director Raghav Bahl said Forbes will define a higher niche for the business readership segment.
“We don’t believe there exists a brand, which can match it (Forbes) either in content, positioning or in the values that it brings. It will occupy a space of itself. It will expand the market as well but within the existing publications, it will occupy its own space,” Bahl said.
Here is a verbatim transcript of the exclusive interview with Steve Forbes and Raghav Bahl on CNBC-TV18. Also watch the accompanying video.
Q: How exciting is the India opportunity, there is so much talk about how India will change after the events of last weekend? Are you excited to be in India?
Q: What space will Forbes India occupy?
Raghav Bahl: I think it will define a much higher niche of the business readership segment because we just don’t believe there exists a brand which can match it either in content, in its positioning or in the values that it brings. So we do believe that it will occupy a space of itself. We do believe it will expand the market as well but within the existing publications perhaps it will occupy its own space.
Q: The world has been through a tumultuous phase––I noticed that some of the articles which you profile in the magazine this time around, focus on Indian entrepreneurs. How do you feel about how India Inc is poised to take on the kind of moves we have had globally?
Steve Forbes: Clearly, India has been in the forefront of technology. India has been in the forefront of areas where entrepreneurship is needed, and that is why we are very happy to be here and happy to be networking with Network18, which is a very aggressive, energetic entrepreneurial company. We think that reflects the values of Forbes Magazine.
We believe in democratic entrepreneurship and free markets. The ability that opens up, the opportunities that open up for people, so we think it’s a perfect fit. We think India as a whole, as far as reforms continue to be made, obstacles continue to be removed towards commerce. The country is going to be clearly one of the world leaders especially when we come out of this temporary slump.
Q: There is an air of bullishness in India, which you would understand after the events of last weekend but do you think things are turning globally as well? We have seen big rally in global markets as well, do you think it’s just a one off bear market rally or could things be changing?
Steve Forbes: I think we reached the lows but you have got to recognize they are terrible lows, so yes; we are off from the bottom. I don’t think this is a bear market rally. The real question is how vigorous will the global recovery be?
Obviously, India and China will do well but the US economy whilst it has reached its low has still not got to the take off stage and that will depend on how vigorously our own central bank applies credit to the economy and whether we can stop some of the changes that are being proposed on taxation, that would slow our economy. So in the next 12 months lots is going to happen in the US and things go right we will be in a very strong vigorous growth mode, if not we will just be bouncing along the bottom that we have reached.
Q: Is the optimism in India justified. Do you think it’s a game changer as people are calling it, economically speaking?
Raghav Bahl: I think unqualified yes to that. Phrases have been used––game changer, paradigm changing––I think what is happening today is that the polity of this country, the political structures of this country were grossly misaligned with the aspiration of the people. I think in one fell swoop that alignment has happened on the May 16.
The political structure now reflects the aspirations of the people and that is a big change; it’s a huge change. Now whether things will change tomorrow morning or India will take its own time and pace. My sense is India will but now India will do it, I do not see any doubt about that.
If you permit me one quick historical comparison, China launched its reforms in 1978 but do remember that China, and it is forgotten now, did do a lot of muddling around for the first 10–12 years. The Chinese reforms really took-off in 1994 that’s when they reached a strategic plateau and my sense is India has done that. We spent our 15 years muddling around; we have reached our strategic plateau.
This time the political structures are behind that tailwind and this time therefore I remain convinced having had the opportunity to speak with the Prime Minister as well as some of his colleagues that they are so clearheaded about what has to happen that this time they really have the mandate and besides just the mandate all the other supporting infrastructure, all the other things are now in place. So I am extremely confident.
Q: The past two months have also raised a lot of talk about decoupling again. Is that a theory that you buy that it is possible for Asia and the US to decouple?
Steve Forbes: No. I think if anything, we more integrated than ever before that doesn’t mean that India won’t have higher growth rate than say the United States or even China in the future. But in terms of if the United States gets in trouble that the rest of the world, India can decouple and ignore it? No. We were into this together and we will be doing more and more together in terms of businesses across borders so decoupling––no. That might have been true 20–50–100 years ago but now we are one. But again you can have relative performances but we are not isolated anymore, we are a global economy.
Q: The markets reaction was there to see, it was documented on Monday and many days after that. Do you think corporate India as well has taken this much heart from the outcome they had over the weekend?
Raghav Bahl: I think you people will be the first ones to be disappointed because things will not happen at the pace at which the media expects it to. There is a reality of Indian politics which will play out. So things will happen but they will happen at their own pace.
All I am saying is that the cobwebs have been removed; the enabling conditions are in place, there is today a political structure which supports the aspirations of the people. So those things will generate their own pace. But I can assure you that you guys will be disappointed in the short-term.
Q: The fear that we hear from a lot of commentators in the West is that this is a temporary liquidity injected respite, and very soon this bout of jumping with steroids will come-off and you will have another massive leg down, not just for the markets. But economically speaking, is there a merit to that fear or apprehension?
Steve Forbes: The US government, even though it passed a big stimulus package, Washington cannot do things quickly. So the spending of the money is not as quick as the passage of the bills in Congress.
What has been disappointing is, I think that our credit system while it has recovered from the terrible situation we had a few months ago, still hasn’t completely thought out. Small businesses are still having difficulty rolling over loans or getting new loans and less credit worthy companies are still in difficulties.
So the Federal Reserve even though it has talked a good game and everyone is fearful of inflation, has actually been tight since December. It has not added one new dollar of stimulus to the US economy. So it is in the hands right now short-term that the Federal Reserve, once our Fed gets its act together we have to focus on what the administration, the new President is going to do or not do and that is still an open book on what may happen.
Q: The other fear one has had sitting over here is one of protectionism in the US, there are a lot of talks about that as I imagined you have watched as well is that a legitimate fear you think?
Steve Forbes: It is a very legitimate fear whenever you have an economic slowdown whether you call it protectionism, economic patriotism or that kind of thing, yes it does get in the way and does slow down global liberalisation.
In the US, clearly President Obama made a mistake; one of his first acts was to bar trucks from Mexico coming into the United States even though that has been part of our Free Trade Agreement with Mexico for years––he pushed back on that. So protectionist pressures are there and that is why the quicker we get these economies moving, the better because this administration still has to learn the virtues of free trade. So I have an educating job to do.
Q: The magazine which launches today has been showcasing entrepreneurship across the world for several years and decades. Put yourself in the shoes of entrepreneur that you are and tell us how Indian entrepreneurs are feeling at this point?
Do they believe genuinely that the worst is behind them and they can get on with growing their businesses or are they still enmeshed in fear like they were six months back?
Raghav Bahl: I think it is much better than what it was. I think Indian entrepreneurs went through two things––operationally, things were nowhere near as bad as it was thought to be. Fear overtook the reality there, but what got jammed were the balance sheets. That is true.
Balance sheets did get jammed and do remember that entrepreneurs are not gods, they take decisions based on expectations. So, many of them over-invested, and rightfully so, because they thought the economy will continue to grow at a particular pace.
The globe collapsed, India did not collapse. That had its whiplash effect on entrepreneurs, and therefore, they were found wanting on the balance sheet size that is now deep-freezing. Therefore, I am very confident that if the balance sheet side deep-freezes and there is a large swathe of Indian economy––the rural economy which is completely unaffected––I would even wager that our urban economy was not as badly affected as fear made us believe it was. So once these two things de-clog, the fear lessens and the balance sheet de-clogs which it is as we are seeing.
I am quite confident that we will be back. Whether it is 7–8–6 per cent those are statistics. On the ground things are moving.
Disclaimer: Web18, which owns Moneycontrol.com and Indiaearnings.com, belongs to the Network18 Group. IBN18 is a part of the Network18 Group.
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