Warning that India's economic growth may slide to about five per cent, leading NRI entrepreneur Lord Swraj Paul, however, affirmed his commitment to investing in India saying he had no doubt it would turn into a major 'manufacturing power-house.'
"My view is that we may see 5-5.5 per cent economic growth. I think it will go down further because India at this moment in the manufacturing industry is not very different from the experience you had in Britain and the US," Lord Paul said in an interview on BBC's Hard Talk programme.
Asked how low the economic growth could touch, he said: "I don't think anybody knows because unless the confidence comes back, we don't know how low it can go.
"And that confidence is not coming back. Because I don't think India or UK or US have seen the bottom yet and you can only hope for improvement when you are convinced that you have almost touched the bottom."
Asked whether his decision to invest in India was a wrong judgement, Lord Paul vehemently denied and said: "I still have no doubt that we would be able to turn India into a manufacturing power-house."
On whether investment in India would be affected in the short to medium term especially after the Mumbai terror attack, Lord Paul, who is the founder of multinational company Caparo, said: "It is bound to.
"But I don't think it is going to be as bad as people think because lot of people including foreign investors are of my view that this waking up of the government is going to come only by the anger of the people and not because of some foreign investors."
On whether 2009 would be a difficult year for India, Lord Paul said, "Without any questions in my mind. There is no doubt about it. There is a lot of awakening to be done if India wants to call it self a country which is on the march."
To a question that why Indian government is failing to heed to his warning, Lord Paul said, "Because nobody seems to take this as a serious thing. I am generally very critical of it because we are sitting on a time bomb."
Growth has no meaning unless India deals with 300 million people living on $1 and 600 million people on just $2 a day, he said.
He, however, said that his company would continue to invest in India because eventually sufficient voices would be raised against the crisis including security concerns of the people as well as investors.
Lord Paul reaffirmed his commitment to India and said that he would not suspend operations here due to lack of confidence in India's economic future.
Criticising the Indian government for not being able to translate growth in alleviating poverty and delivering infrastructure, Lord Paul said, "This is the biggest problem of India".
"Because I don't think that the government and even industrialists have realised that unless you are going to alleviate poverty all this great talk about 'we are getting to be a developing nation' is false," he noted.
Lord Paul also said that he has 'not really' seen such a difficult business environment in his career so far.
Asked whether India could decouple itself from the problems in the western-rich economy, he said that India and other countries have enjoyed the benefits of globalisation and 'you think that you (India) are not going to be affected. It is like living on the moon'.
Raising concerns over the failure of capitalist systems in the ongoing global economic crisis, Lord Paul strongly opposed any form of bailout by any government and said the need of the hour is to have nationalised financial institutions.
"I am against bailouts of any kind, because I did a speech only in the last week in the House of Lords. I said bailout is not a solution," he said.
To protect the industry and to do something for the industry, "we need to go all the way in the chain", he added.
". . . that is why in last week in the House of Lords, I suggested that we should have an industrial development bank in the country, which should be government-owned, which should have on board people who are actual manufacturers," he said.
"The capitalist system has failed, as much as in 1991 the state system failed. . . everybody got very enthusiastic, only private sector will (work). Private sector has miserably failed (in) the country.
"You are in a situation, where there is no easy solution. It is a worldwide phenomenon. Nobody knows whether the banks are telling truth. Nobody knows how deep a hole it is," Lord Paul said.
Asked if he regrets reposing faith on British Prime Minister Gordon Brown and whether he is the 'right man' to run the country in the midst of the current crisis, he said, "I have no regrets at all. He proves to be the best prime minister this country has had... I have not found or heard a better proposition in any man in any part of the world, including the opposition."
Talking about the UK's immigration laws, Lord Paul said, "Globalisation without free movement of people is not a possibility. Globalisation will be successful only with free movement of people."
