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Robert Rubin, now a Citibank board member, on the bank's India plans and other matters. Robert E. Rubin, part of the triumvirate---along with Alan Greenspan, Federal Reserve Chairman and Larry Summers, one down in treasury---that worked to stop global economic panic over the South Asian economic crisis, was in India in early November, in his role as the chairman of the Executive Committee and a member of the office of Chairman of Citigroup Inc. During his visit, he spent some time trying to get a first-hand feel of the next set of reforms, banking regulations, and privatisation from representatives of industry and the government. BT's Roshni Jayakar caught up with Rubin in Mumbai. Excerpts from the interview:
Q. Mr Rubin, how important is India to Citigroup? What kind of investments have you planned in the country? A. We have been restrained to some extent by the limits on what non-Indian financial institutions can do. But if you look at the size of India, its rate of growth, and its demographics---in a world where many industrialised countries are going to have a poor ratio of workers and retirees, India is going to have a very large and young population---I think it could turn out to be very important for Citigroup, if the country stays on path and continues to move at reasonable speed on the issues it is faced with. We have a very large insurance business, and would like to be in charge of our insurance operations in India (at present a foreign entity can hold only 26 per cent equity in an insurance venture). Citibank would also be interested in acquiring an Indian bank if regulations permit. Your 1993 deficit-reduction plan helped the Clinton government move from to budget surpluses. Any suggestions for India? When President Clinton took office in January, 1993, we had a large budget deficit and the President's view was that we needed dramatic changes in the economic policy. Budget deficits result in high interest rates and sap confidence. President Clinton said there was much else he wanted to do, but the threshold issue was to establish fiscal discipline. That's what we did. If you look at India---and I don't profess to be an expert, I'm not---a lot has been accomplished, but there is this issue of structural reforms in addition to fiscal deficit. Fiscal discipline is critical for economic success. You have been one of the drivers behind the global financial architecture. Have your views changed after the anti-globalisation protests in Seattle and Washington? Globalisation is enormously beneficial to the entire world. There are capital flows to emerging market countries and we have a more efficient global economy. But there are also real issues, real concerns like economic and cultural dislocations. Along with globalisation, we need a parallel set of policies that address these side-effects of globalisation. You cannot stop with technology, capital, and trade. If capital and trade is freed, what about free movement of labour? It's a difficult issue. The US has benefitted enormously from immigrant.... (pauses)... But I don't think answer to poverty or development in emerging markets lies in immigration policies. I think the answers lie in the countries themselves. |
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