I think what we seem to have created for ourselves in an environment where this global growth is slowing and where we’ve had an opportunity to stand out as the beacon of light in terms of growth and opportunity, I think that we have conspired against ourselves and have lost what could have been our moment in the sun.
...More importantly, from a practical perspective one should look at what the consequences of something like this would be over the next 10 years or so. We are a country running a huge current account deficit, we need to finance it. You need to make sure that you have capital flows in place so that there is no amount of sudden discontinuity in that process because that could prove very expensive.
...I think that the world is in a vulnerable position; it’s the wrong timing to be doing anything knee-jerk. More importantly, we need $2 trillion for our infrastructure spend over the next 7-8 years, a lot of that will have to be foreign capital. It’s very simple, when someone says I will invest in infrastructure over 25 years, but if I run the real risk that the government might renegotiate the contract with me with retrospective basis five years or 10 years later, I might end up with a low return than I bargained for, then upfront I am going to seek maybe 200 or 300 basis points more. Now 300 basis points on $2 trillion is $60 billion a year and $60 billion over 20 years is a lot of money. If you just do the trade off between earning a little bit of tax upfront because of a particular deal or transaction and incurring a significantly higher cost of capital over all you need, I think the mathematics is very clear in my mind.
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