Well-known hedge fund manager Jim Rogers has sold his holdings in Indian firms and exited India because Narendra Modi’s National Democratic Alliance government has not embraced many of the promised reforms. Rogers noted in April he was becoming disillusioned with India because Modi government has been all talk and no action, and doesn’t think the Indian market has new drivers to propel it.

India's FDI inflows

In an interview with Live Mint this week, Rogers said: “I am sure Modi is a smart guy, he enjoys good press, and he makes a lot of friends for India. But I, as an investor, after almost a year-and-a-half, have decided to move on to other places, partly also because stock markets are not going to be particularly good for the next year or two.”

Jim Rogers

Jim Rogers explains why he is exiting India

Rogers does not mince words when he explains why he sold all of his positions in Indian firms. He says he continued to wait for some time for Modi to make the promised reforms, but pulled the trigger when it was obvious nothing was going to happen near term. “I did wait a little more time, but now I have sold all my India shares. I did sell my India shares as I don’t see anything happening. The market was high, and investors had anticipated great things, including me—even if he (Modi) were to do things, the market had already discounted some of that because it had gone up a lot, and there was nothing new coming from Modi. You can’t just invest on hope. Even If reforms started coming, it may not be enough to make the markets go higher, because markets have already factored it in. If the reforms are substantial, the markets may go higher. No indication of that.”

Rogers says might get back in India in the future

Rogers, however, is certainly not giving up on India. He says he’ll be back in if there is a significant correction or if the government starts getting serious about business-related reform. “I may see myself returning back to India at some stage if Modi starts doing things, or if the markets go down a lot—some stage can even be a long time away, but not at the moment. If Modi made the currency convertible, if he made the markets open to outsiders, then I would have to be back in India again. So far Modi has been doing worthwhile things like addressing some social issues—I am all for that, and that is great for a lot of people—but India needs more.”

Praise for India’s central bank

In the interview, Rogers is very supportive of Indian central bank governor Raghuram Rajan, calling him “probably the best in the world.”

When asked about all of the recent criticism of Rajan, Rogers noted that central bankers are supposed to be criticized for interest rate policies. “Central bankers are supposed to maintain currencies and low inflation. If you want to do something about the economy, you should call out Modi or Parliament and not the central bank. Central banks that cut interest rates because of politicians—such countries usually have economic problems, currency problems, and all sorts of other problems. In my view your central banker is doing the right thing—he understands what banking is all about, he understands what currencies are all about and he understands the economy. The more criticism he gets, the better—that means he is doing what the central bank is supposed to do.”