Interview on CNBC TV 18 on 4th November 2008

Here are the excerpts of interview

MJ Akbar, Chairman and Director of Publications at Covert, said the United States could go through a phase of protectionism. "The most immediate concern is to get US economy on track."

According to Akbar, India and China could face the brunt of a US protectionist policy. "Consequently, there could be a capital shortfall of USD 40-60 billion in India."

Here is a verbatim transcript of an interview with MJ Akbar on CNBC-TV18. Also watch the accompanying video.

Q: Any big discernable distinction that you would draw right now between the two candidates from an India perspective?

A: Most discernable distinction at the moment is that one is winning and the other is not and the person who is winning is a democrat and we have tended to have a kind of historical suspicion of any Democrat in the White House. At this particular moment, that suspicion is now overlaid by a perceptible crisis in the American policy towards South Asia – a crisis perpetuated by a feeling that it is now beginning to lose the war in Afghanistan. The next American President if it is going to be Barack Obama, which is likely, has absolutely committed himself to finding a way out of Afghanistan. He is going to pull the troops out of Iraq, but he cannot afford a long and costly war in Afghanistan either. At the moment the American economy will not allow it, the American mindset will not allow it, the American public will not allow it and Barack Obama himself will not allow it. That is the easy part, but the difficult part is how to go about doing it.

Q: From whatever you heard of Obama and from Obama so far, anything that suggests that the US in its crisis will turn ultra-protectionist because that might have ramifications for a large part of the Indian services sector?

A: I have just been to America and was there for about two weeks following the campaign. I feel America is going to go through a phase of protectionism, because outsourcing of jobs was a campaign issue and India and China are going to be hit. We are going to face a brunt of it - China far more than us, but as an extent those companies or industries which are linked in some way into the American economy are going to feel the pain. There is no getting away from it.

We are also going to feel the pain in other way because I think there is going to be a capital shortfall for the Indian industry, which has been estimated between USD 40-60 billion.

Q: What about the nuclear deal? Do you sense that either candidate is more benevolently inclined towards that deal and is Obama not because that has been one suspicion on apprehension which has been voiced?

A: The deal has been faded out as of now, because it has been overtaken on both sides by other events. On the Indian side, all that was advertised - whether it was a guaranteed supply of nuclear fuel or technology according to the statements sent by President Bush to the Congress, which is the operative part along with Hyde-act - those commitments are not coming through.

So there is going to be some serious thinking irrespective of who is in Delhi, of how far we should commit ourselves to the American industry in our planning for nuclear energy.

Q: What is your sense then of which way the financial industry is leaning, because as you pointed out when the first bailout package came in for the financial sector, it was the Democrats or was Barack Obama who was keen on getting it passed. In that sense does the financial space have a leaning against the other?

A: The decisions made during a campaign do not really translate into the decisions made after you have got the job. And we have to forget positions taken during the campaign because, most campaign positions are populist. The Republicans who were against the bailout were responding to what the Americans called mainstream. American people are very angry, that what they considered to be a bailout of fat cats.

But one of this startling the effective themes of the Barack Obama campaign has been his continuous and almost merciless attack on the trickle down theory, which has been propagated by the World Bank and which is extremely fashionable with this present government in Delhi. He said this trickle down theory cannot be acceptable because it means that those at the top get all the rewards and those at the bottom get the trickle. He is trying to reverse that. You will see the impact of this economic crisis, collapse in a new set of policies and approaches which because America is doing it will impact the world economy and give a change of direction after the Reagan years.

This phase of thinking that has shaped the world economy from Reagan’s Good Morning America to George Bush’s Good Night America that phase is over. It has to be a new morning and the new morning will be far more inclusive than the trickle down stuff that we have been hearing so far.

Q: How do you see this current parliament session going and are you in the camp, which believes we could be looking at first quarter election in 2009? Is that even in a realm of possibility?

A: I don’t know about which Parliament session you are talking about; we have had six days of wrangling and long abeyance. The problem is not in this length of the session at least. This present government is not going to call for elections one day earlier than it can possibly can. But the question is what is possible anymore? You can see the fray and disarray of the present coalition when Laloo Prasad Yadav is threatening to ensure that all his Member of Parliament (MPs) resign – there is a general mess. There is no message this is just a general mess, which is inevitable when wear and tumble of politics overtakes governance. We are in an electoral season; we are in a season in which political parties are positioning themselves for votes, they are not positioning themselves for governance.

So, the sooner this government calls for an election to clear the air and create a new coalition which can takeover or even the present coalition depending on who wins the election, unless, that process is brought sooner or later you will just see more confusion. I do not think that at this moment of economic crisis, which we are clearly facing India can afford confused government in disarray, which is what we have at the moment.

Source: Money Control