The Exchanges

Q Is that because? Foreign investment and privatization was not allowed here like it was there, or what was it?

A Yeah, so much more, much more freedom for foreign capital to do what you want, and also for people to do what you want. I think that this is one of the things that for me, what does capitalism mean? And what is the difference between capitalism and other forms? For me, capitalism is about giving people as much economic freedom as possible. So Singapore was doing that. China, in fact, Had already started doing that. India was still very much a socialist country. The first sign of opening up in India happened, in fact, in the early 19 eighties. Uh, you know, people would, uh, usually associate India's opening up in 1991, right? When the big reforms took place with Narasimha Rao, Manmohan Singh. But there was also a phase in the, in the, in the eighties, when the first phase of opening up in India happened. The peak of Indian socialism was 19 seventies, when Everything was virtually controlled by the government, and then India ran into a financial crisis in the early 19 eighties, and under partly the pressure from the IMF, the India began to gradually open up, ah, but, ah, yeah, the 19 nineties was when the real opening happened, but Singapore, China were well on their way of becoming more economically free countries, and Singapore was already a big success story.

AI assessment note: “Yeah, so much more, much more freedom for foreign capital to do what you want”

Q Yeah. Do you think everybody wants more? In perpetuity?

A Yeah. You know, like someone gave me a very interesting line in this. In fact, uh, I can, you know, probably name him like Ajit Jain, uh, from Berkshire Hathaway, that no matter what your net worth is, you always want to be two X. Everyone thinks everyone across the income curve, unless you're Bill Gates, who apparently said that for me, everything is free. So that's different, right? But for most people across the spectrum, I've noticed, especially amongst the, you know, like amongst the middle class or middle class, even if you end up making, even people who, you know, like are worth fifty million or say, just keep wondering, only if I was a hundred million, I would be so much happier. But you know, and if, and if you were like, if you're making like a million dollars or whatever, or you have even a net worth, if I had two, I'd be happier. I think it was a very basic observation, but I'd say, 99% of the people, it's somewhere fundamentally true.

AI assessment note: “no matter what your net worth is, you always want to be two X.”

Q the country. FDI in the last few years seems to have slowed down significantly. How much of this is geopolitics? How much of it is the economic situation? Coupled with the tariff issues, is the world becoming more fragmented by each country? Looks inward more than it does outward, like a more globalized world was looking outwards five or 10 years ago. What do you think will happen with FDI?

A No, I think that as far as FDI is concerned, undoubtedly India's rate has been a bit disappointing, right? Because if you look at the East Asian countries, when they were doing well, since we've spoken so much about East Asia today as, as an example, they were attracting FDI of three to four percent of GDP. We have never really broken much above one percent of GDP, the net FDI number at least. And that's because as I said, like earlier, that it's just a difficult country for a, A foreign investor to come and do business from the start. That you're almost happier doing portfolio or other investment where you're piggybacking already on the existing local person who knows how to navigate this environment. But to directly set shop here is still very difficult. Therefore our FDI number has barely broken above one percent of GDP. Ever.

AI assessment note: “it's just a difficult country for a, A foreign investor to come and do business”

Q Uh, are we there yet? Have we reached that point? India as a country?

A I think that India has always sort of the risk that, that why India will never achieve a growth rate like China of nine or 10%, you know, like in terms of we have, I think all now reconciled to the fact that we are a six percent type economy. The ambition of growing at nine, 10%, I think doesn't even exist anymore. Uh, and partly it's because of the recognition that in a country like India, our society or whether it's our politics or what is never going to ever allow That sort of, ah, runaway growth to take place, which requires very little welfare, and on, and any government spending on infrastructure, and also very little protection from, ah, you know, what's happening, ah, internationally. Like you allow foreign capital to come, you allow, you don't have much of tariffs and stuff like that. I think it's very difficult in this country to have that sort of model. So that's the reason why India is unlikely to ever grow At nine, 10% on a sustained basis, which East Asia did, and why we are now reconciled to growing at six percent. That type of growth rate is what we are sort of seems to be what we are comfortable with.

AI assessment note: “we have, I think all now reconciled to the fact that we are a six percent”

Q Do you think India is an outlier there? Because when I think of our neighbors all around us, be it Pakistan, Sri Lanka, Maldives, Bangladesh, Nepal, they seem to have anti-incumbency. They have cyclically changing, very quickly changing leaders.

A Yeah, but I'm saying, I'm, I'm looking at, you know, a much greater canvas of emerging markets here, because these countries, to be honest, you know, like, aren't that economically significant. But if you look at around the world, from Indonesia, to Brazil, to other countries, you find, even Mexico and stuff, you find that the incumbent in general, the chance of the incumbent winning has now gone up by more than 50%. In India, it's Possibly still fifty-fifty or, you know, depending how you look at the data. Whereas in India's case, if you look at it, uh, the word anti-incumbency was in fact coined in India from what I know. Uh, you know, like, uh, uh, my, uh, uh, sophologist friends, uh, Pranoy Roy and Dorab Soparivala with whom I travel on election trips.

AI assessment note: “In India, it's Possibly still fifty-fifty or, you know, depending how you look”

Q So it's a hard job for a government who's not doing this one thing full-time, like. Yeah. But how do they determine where that line is? Where are they over-regulating? Where are they under-regulating? Where are they over-taxing? Where are they under-taxing?

A Yeah, I'd say, but on regulation front, I see, I still feel this massive scope for deregulation still, because doing business in this country is still a very difficult thing. I mean, you know, um, like I know that we, I mean, if we want to set an office up here, the amount of things that you still have to do compared to like, let's say setting up an office in some other countries, I can tell you from personal experience, like the regulatory, uh, burden is still much greater in India than, than any other country that I know of. So this is still a very tough country to do business in, I feel. Uh, you know, and therefore, uh, foreign investors are much happier piggybacking on some local person who knows how to navigate the system, rather than come greenfield and set something up. Uh, it's much more difficult to do it. Uh, so I think that is, that is an issue, and this is from personal experience too, I can say that.

AI assessment note: “on regulation front, I see, I still feel this massive scope for deregulation still”