Global market to see better growth in 2017 than 2016

Global economy: It is possible it will grow a bit better as long as certain people don't upset the applecart too much. There has been a lot of money around for many years and some of it is eventually going to seep into economic activity. And I think we have seen a bit of that over the course of the last 12 months. However, actually much more important for a bit of a revival in export growth has been a relatively weak dollar.

Will US show faster economic growth or will this euphoria die down? There is a lot of euphoria, there is a lot of consumer confidence in a lot of the - the confidence indices have picked up. I have got to say that that makes me slightly concerned because the confidence indices and the signals on the business side are not always forward through into economic activity and I think we really need to see whether that is going to happen.

On strengthening dollar: That is what would worry me that if we got a strengthening dollar, 103 or staying there. Of course, it has actually come off a bit since then, but let us say it went back to that or went to 105 and interest rates went up slightly, even just slightly from here. What that does is that it squeezes purchasing power in dollar terms in places like Europe, Japan and the emerging markets and that tends to be very bad news for export growth.

What should emerging markets expect in terms of fund flows in 2017? : Global money flows are going to be coming to India for the next 10 years or maybe even 20 years to take advantage of the demographic dividend that the country is producing. But it is also true of places like Indonesia, Philippines, Vietnam and parts of Africa that I don’t know anywhere near as well as I know Asia.

The story of emerging markets particularly in these areas of potential high demand domestically and young people to shoulder the burden, that is a story that is not going away. I really do think that people are beginning to realise in the industrialised world that the growth isn’t there, even if it picks up this year it will be insipid. It will go back down again because interest rate burdens are far too high. That has happened at a time when pensions are a real weight on the system and government spending is a weight on the system. Economic growth is now stuck at much lower level.

What is your sense of the Indian economy's growth in 2017? I am so positive about the demographics, the people here, the business attitude, the desire to grow, the desire for wealth. There is nothing that can really derail that for me, in terms of an India story. Governments are always there to unsettle you from time to time and certainly the demonetisation exercise was unsettling. It was a surprise in particular to me, just in terms of the timing because we had gone through a pretty weak period of capital goods investment and capital goods production.

The thing that was holding growth together in India was a consumption story and of course, demonetisation, if anything, was going to derail the consumption story. So, it was a bit of a surprise in terms of timing, but I suspect it was much more to do with politics than it was to do with economics in that respect.

The good monsoon this year has meant that the government can now focus on capital spending, infrastructure spending, boosting the economy and that means that the demonetisation downside is probably going to be much more limited than people were perhaps, expecting in November, 2016. So, as long as that happens and that is what the Budget was suggesting, we may have a very pleasant experience with Indian growth in 2017 and even better going into 2018 and 2019.

Further rate cuts by RBI: So I would say interest rates are pretty appropriate just now. I do not know whether the central bank really needs to do very much more. Personally I may have wanted them to cut another 25-50 basis points, but I do not think there is any rush to do that and I do not think there is any great necessity that that should happen. The outlook for growth is fine. The interest rate signal is good. The external balance has improved dramatically when we take into account direct investment flows and India is actually looking really pretty good going into 2017.

Do you think Donald Trump can stymie trade and stymie global growth? At some point, Mr Trump is going to come to his sense and see where his bread is buttered. Refusing visas to Indian IT engineers and entrepreneurs is one way of making sure the US economy just falls flat on its face again. We all have enough advisors out there telling him that this is going to be a silly policy that is to the detriment of making America great again rather than to its benefit.

If on the other hand, they do not do that and he continues with his policies to stop people coming into the country, maybe Indians are just going to stay home and make the money here and look to the domestic economy and the rest of the world as places for Indian IT to be sold and I would be very comfortable with that.