India now flavour of the world: George Soros

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Legendary investor and Chairman of Soros Fund Management George Soros says it is India's democracy that gives it an inherent edge over China, as a strong political system is required to ensure that financial crises don't turn into governmental crises. "That's what happened for instance in Indonesia. After 15-20 years of very high growth, eventually the financial crisis turned into a political crisis. That is the danger in China because it's not a democratic country," he says.

Soros, who is visiting India these days, said this while talking to CNBC-TV18's Editor-in-Chief Raghav Bahl, Soros also touched upon the investment prospects in the country and why India is the flavour of the world. He also spoke on the Chinese economy, the political and economic policies of the United States and what impact it may have on its future.

Excerpts of CNBC-TV18's exclusive interview with George Soros:

Q: You said that India to you seems a fundamentally stronger investment story than China. Is that correct?

A: That is right because India is a democracy and China is not. A growth in particular financial markets don't grow to heaven, they usually have serious corrections. When you don't have a good political system, if you have a financial crisis, it is liable to turn into a political crisis. That's what happened for instance in Indonesia, after 15-20 years of very high growth, eventually other financial crisis turned into a political crisis. That is the danger in China because it's not a democratic country.

Q: Do you have anything specific that you have noticed as danger signals in China that prompts you to say that or is it a more general inference from a democratic versus non-democratic society?

A: I think there is no immediate danger of any kind of a political upheaval in China. But the rulers are very nervous about colour revolutions, maybe unduly nervous. This is a very bad development because as a result, they have stopped the political opening, they are cracking down on media freedom, on civil society. This actually increases the danger eventually of a political crisis.

Q: Do your investments reflect this bias within your thinking that India is stronger, are you more invested in India than in China?

A: Somewhat yes.

Q: From market folklore, we understand that you could be about a billion dollar invested in India. Is that a correct estimate?

A: No, its not.

Q: It's not that much?

A: No, it's not that much.

Q: In what kind of asset classes would you be distributed in India?

A: I don't do it myself; I have got a team that is doing it. But they are heavily invested, actually they want shares in your television company, which is a full disclosure, I think it should be mentioned. They have fairly large positions in individual companies, some in real estate, in infrastructure and in financial services.

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