Interview with Amitabh Singhi, Managing Director at Surefin Investments

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Jun 12, 2011
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Amitabh Singhi is managing director at Surefin Investments, an India-based portfolio management and investment advisory company. Since inception in mid-2001 the fund has returned 27.9% annualized, net of all fees to investors (as of 2011). Mr. Singhi graduated with a B.S. in economics from the Wharton School at the University of Pennsylvania, with concentrations in finance and management. Amitabh was one of the speakers at the last Value Investing Congress in New York.

Amitabh was kind enough to meet me for lunch in Manhattan and talk about value investing in India. He was also kind enough to pay the bill! The interview was conducted on March 31, 2011; it is in a very informal and in conversational format. I started recording our conversation somewhere in the middle of our talk.

Pre-Interview Conversation:

My really good friend from college is in Hong Kong. He runs a fund there. So, he invited me and I visited, and these guys (Chinese people) remind me a lot of the Gujaratis. In India we have a state called Gujarat where all the traders are from. They are very no-nonsense and low key. They keep the costs very low and invest in low-risk businesses, and they do very well. At least some of the guys I met in Hong Kong were like that. They want to do business, you know?

(Speaking about Berkshire). I am just a big fan of all that they have created. The company is bigger than any individual, which is what people want to see over time. It’s amazing what he has created in there right? Just look at what he has created. He’s got the best managers in the world, and each of them is remarkable.

The Indian generation that is 50 years old now is subconsciously scared of them (Chinese). The new generation that is coming in is completely pro-China. It’s just amazing, the scale that they have for everything. Indians should do business with them and it will help us a lot. I think that even with the political class, as one generation will retire and another one will come in, they are bound to learn some things from the Chinese. It is a huge sort of synergy to just put plants here (India) and raise a lot of money from China for infrastructure. Then, slowly the trust will grow, and then it’s simply good business in that sense. Why not do it?

You had said I think that there were 150,000 dialects?

Language in India changes slightly every 150 miles so there are many different versions.

I never knew that! I thought people spoke some Hindi and the Indian Muslims knew some Arabic.

We speak most languages. We have every religion in the world. And everyone is allowed to practice his or her faith. There are socialists, capitalists, and people in between. There are communists, completely right wing and left wing, we have it all! We don’t wage wars or fight, and it’s just chugging along. We are pulling people out of poverty that we inherited when we achieved independence. I think when we got independence in 1947 there were 400 million people. Now we have 1.2 billion. And out of the 400 million people, the percentage that were under a dollar a day, even real terms, was much higher than what we have today. Women weren’t allowed to work; now they are allowed to work and the overall progress is remarkable.

If you go to the heartlands of India, people are very nice. They will welcome you to their homes and give you tea, and that’s not in just certain regions; that’s everywhere. The poorer people are in India, the nicer they get. It’s weird. They don’t have crazy expectations and they aren’t frustrated. They eat their produce, they have large families to entertain themselves, and it also takes care of mortality and all of that. It helps them in the farms and it’s very agrarian, so that’s one thing that’s going to change over the next 20 or 30 years. But, it’s a great place to be because expectations are so rational that you don’t go nuts.

The biggest thing is that the capitalist engine has now started, so you see people pursuing wealth creation. They start redeploying and spending, the next generation will live better than this generation. We had a bit of a lost generation in the 80s, but now the engine has started so it’s very exciting. It is all very exciting back home.

Well that’s definitely interesting, and I know I wanted to ask you some of the macro questions.

Go ahead! Don’t expect great insight on macro but go ahead. (Laughter)

First off, could you just tell your background?

Sure. I was born in Kolkata in 1979 and I lived in Delhi. My family is actually from Calcutta; it’s called Kolkata now. It’s a big city on the east coast, and it’s part of a primarily communist state. We moved to Delhi when I was a year old. I did my schooling in Delhi, and then following that I came to Penn to Wharton. And, there was a dual degree program, which I wanted to do. They had a business and liberal arts program so I got into that, but then I switched out and only did Wharton. And in one summer I worked with Goldman in their sales and trading division in New York. Then I worked with Frank Quattrone’s Technology Investment Banking group within CSFB as an analyst when the tech bubble had burst – it was very hard.

I left and went back to India the very day that I got my bonus because India was very cheap, and I wasn’t really enjoying the whole banking experience. Actually, in my junior year of college, Mr. Buffett was on our campus. Obviously he was popular and the tickets were all gone; there was no access. So, on the intranet I watched the video of Buffett’s visit all night. I also read the "Security Analysis," and I read the Intelligent Investor in college; it sort of made sense. Then throughout my time as an investment banker I managed some money for both friends and family back home. There was loss aversion there because of the tech bubble (their portfolios had all taken a big hit). So, they needed a fresh set of eyes to come and take it over; it was luck in a sense. I didn’t know that I wanted to be an investment manager, I didn’t know much about investing, but the good thing with Mr. Buffett is that he encourages you. He makes it look very easy. Ironically it is almost a disservice because everyone thinks that they can be an investor when he makes it look so easy.

I realize it now that I have a huge learning curve from now and looking ahead. The easiest money in India was buying net-nets and cigar butts, which anyone can do. That’s done. Now you actually have to have the skill to sniff out an opportunity which is that big, and knowing yourself and standing away from the crowd on certain things. I think when you read “ Warren Buffett : The Making of an American Capitalist” by Roger Lowenstein, or the “Snowball” to some extent, you get lulled into believing you can do it; which is his greatness. Because, you know, if you read George Soros, you know cannot do what he does. The niceness of Mr. Buffett is that he (or any of the biographers that covered him) will make you believe that you can actually be half as good as him.

So, mainly, that’s what attracted me. I got into investing because I wanted to be more with businesses. I loved accounting and I loved numbers. I really enjoyed the lifestyle of being not over the top, but making good friends and learning from them constantly. It was also something that got better with time. If you are an investment banker you can’t do it after 40 because you would have to be a nut to do it, especially in a very high-strung environment like Wall Street or something along those lines.

I always joke that one year in investment banking is like two and a half years in a normal job.

Well, two and a half years of a bad normal job, yeah. I couldn’t agree with you more. It’s crazy! It’s also work that doesn’t necessarily make you more intelligent. I mean, you learn a lot in investment banking. You learn to work in a team. You learn that you can stretch yourself and by that I mean a lot. You learn that you can work 20 hours a day and not die. You can also learn how to build a services business in scale. Say CSFB — they will have 2,000 bankers in a building who are all rich and all working hard to create that kind of an ecosystem. It is remarkable to create that kind of business. But, I don’t want to work in one. I think that in investing you just needed a brain and understand your weaknesses, and then you could put money to work. Something is very attractive about that. Then you have this whole betting mindset, which I enjoy a lot. Sniffing out a lot of opportunities to see what you can find, and you will get a result. You definitely get a result. You will know in a month or two months if it’s a special situation investment or two or three years if it’s a good investment. And you also know you’re wrong; there is no vagueness there.

Now not too sound “American centric,” but value investing originated in America with Benjamin Graham and it seems only in the past few years that value investing has become popular worldwide. How did you discover it?

I really discovered it through reading about Warren Buffett initially and then Graham and Dodd — the usual way.

But talking about India, I discovered that now in India we have people who have been … there is a gentleman called Mr. Chandrakant Sampat, and I think he has been investing since the 70s. But, there are other people in Bombay who have been doing it since the 80s. The whole value investing thing, it’s actually only about having a businessman’s mindset. You hold capital, you give it out when the world really needs it, and you keep a low-key profile so that you don’t do stupid things.

There has been a history of good quality capitalism in India. Ultimately value investing is nothing but a glorified term of doing the same thing. Yes you are investing, but nothing stops a value investor from becoming a businessman and owning a company and then taking capital allocation decisions. So, contrary to what people may think about India, there have actually been some very good people there for building businesses and having long runs in business. And with that, they have now become of size. We have had a history of doing business and we have companies that are 150 years old in the country. I mean, if you look at one of the most prominent families in India, they are the Birla family and they have an ethos of business in the family. Most of the Birla generations have a certain code of principles. They always have very good relationships; they are very disciplined with their time, diet and daily routine and all of that as well. They are entrepreneurs, they keep doing business, they keep reinvesting capital, they don’t spend much on themselves, and they also have a philanthropic side. I’m talking about 20 or 30 years ago where they built many temples, they built many of the hospitals, and they work in a way that a whole town has come up out of the ground because they have built a university somewhere and the town followed. The Birla family, you know that they will be around 30 years later; at least some tree of the family will. It’s because of their own ethos and their culture.

One of the larger builders of businesses over the history of India is the Aditya Birla Group, which is run by Kumar Mangalam Birla. He was 29 when his father passed away, so he took it over. He bought out Novelis a few years ago, which was the leader in some types of aluminum manufacturing in the world. It’s probably a $30 billion dollar group now. He’s 40 years old and lives very simply from what I hear and I read in the press. Of course there are serious questions about their capital allocation decisions from time to time which I think are very relevant, but I am only using them as an example of empire builders.

There are some remarkable people. One could look at the Ajay Piramal, Anand Mahindra and Gautam Thapar as other examples of people who are not value investors in the strict definition but have made a fortune using the principles of value investing over long periods of time.

I guess you could call them Buffett-esque in that sense. They aren’t as smart as Buffett maybe but no one is, I get that. (Laughter).

Which investor most influenced your style of investing?

Well it’s very tough to dispute Benjamin Graham and David Dodd being the mind changers. I think if you read the The Intelligent Investor and Security Analysis carefully, just read it once very early in your life, it’s a bit like reorienting your brain. It just sort of fixes your brain the right way. You read that book once properly (with footnotes and appendices) and then you are done. I think that’s the kind of authority that they have. You can’t take that influence away.

I think that Mr. Buffet’s influence is that he points you in the right direction. So he says, “Oh you can do it.” Which is a fallacy, But he says, “Hey you can do it, why don’t you go read about Li Lu or Tom Murphy, or why don’t you go read about what my friend Charlie Munger has to say? And then why don’t you go read about what so and so did in the 70s or 60s?” And that basically leaves you with more people to read about, and then they give you more people to read about and suddenly you are in this ecosystem of really brilliant people, and then you are reading and learning.

So, it’s tough to kind of fix an influence, but Buffett made it more optimistic, and he made it more palatable. Because with Graham it’s very tough to give a 19-year-old guy a copy of Grahams’ book and then expect him to start investing. Graham in “Security Analysis” stops somewhere unless you read all of his little articles and keep searching. It is very tough to keep investing like him. Seth Klarman does a lot of credit arbitrage, and distress stuff, and fixed income arbitrage, but it would be very tough to do what he does in India just for example. He also doesn’t make it sound sexy at all. From what I have watched, it’s not for the faint-hearted. But I think what Warren Buffett has done and a few others have done is that at least if your try to be like them, you will end up being a better human being. You may not be the best investor, but you will be a slightly better investor, and you will be a better human being. I think that’s a big contribution by them.

You have two funds: Surefin and Amrit. Can you explain the difference?

Surefin is the domestic fund for Indian investors, which has a longer history. It is registered with the Indian regulators as a Portfolio Management Scheme (PMS). It’s like a hedge fund, but it’s structured as a bunch of separate accounts for each investor as opposed to an LLP. It took me 13 or 14 months to get the PMS license. It was my first brush with Indian bureaucracy and conservatism. They said, “What degree do you have?” and I said, “I have a bachelor’s from Wharton with concentrations in finance and management.” I thought that ought to floor them. They came back and said, “Well you aren’t qualified.” And then I said, “No, Wharton is a good school,” and they wouldn’t believe me! So I sent them a Business Week with college rankings and many months later I got my license.

Amrit Capital is an adviser to an FII (Foreign Institutional Investor) fund called the Amrit Fund Value Fund, based out of Delaware (in the US) and Mauritius. This fund can take capital from anywhere in the world except for domestic Indian money. It can take capital from any non-Indian anywhere and any NRI, as long as the investor is an accredited investor.

So you had 30% returns net of fees since 2001. I do not know how to phrase this, but how the heck did you do that?!

We have done about 27.9% per annum since inception. It’s with a small capital, but we’ve done fairly well.

I think it was like a 64% CAGR for the first four years. And it’s been downhill since then. When the market fell in 2009, we actually fell much less than the market. Of course when things fell, a lot of our stuff fell on very low volumes. So we couldn’t help it. I mean the bid/ask spread was very high. Some of the illiquid stuff really took a hit. But that was good; we put some money to work that fall. It was good. We wish that more of those came.

When in 2009?

Yes. Oh my god that’s all we would need.

How much do you have in your fund if I can ask?

We are at just under $15 million. And we have some more outside our direct management, under advisory agreements, etc.

We have to be choosy about our investors. We don’t like to report our holdings unless legally necessary. International individual capital is what I am looking for, but we weren’t structured until recently to take it. I want the right kind of investor also, one who is happy at the bottom of 2009. I think it really hinders your ability to do what you want to do. I mean we don’t do rocket science, right? We don’t do anything great. We read some numbers, we do our research and something goes off in the mind, and then you put in your bid. It’s not very complicated. The tough part is really being able to say no and yes at the right time and also having the right ecosystem and infrastructure around you. And I don’t want to have a system where we have the wrong guys investing with us. And by the way, the “wrong guys” could be totally ethically and morally sound, but they just don’t think about investing the way we do. We currently have a phenomenal set of investors.

Why wouldn’t you take from fund of funds?

Just the reporting is a hassle with institutional funds. They want to justify their existence (and rightly so) and they have to put a risk management layer on top of you, and they have to have a call with you. I don’t want to spend my life always being on the phone and talking to people all of the time. My performance should speak for itself and any other way I think is a distraction. I think that we will be larger — it just may take longer.

I don’t have an IR team; I don’t have many people in the office. I just don’t enjoy that. I’d rather just invest money and hopefully capital will find me. So I think that now that we’re structured appropriately we will get more capital going forward, and if we don’t we will be at 15, 20, 25 million and we will just keep compounding that over time.

And this is Amrit, the hedge fund right?


You are concentrated right?

That’s actually a great question and it’s something that I am working on. I think that there is no fixed answer. Depending on what’s available in the overall markets across asset classes and how your cash flow is looking (with regards to investor redemptions or investments). It’s an urge that I fight. I think that as you grow older and you talk to more people, somehow you want to get less concentrated. But I think it’s better to be more concentrated than less. You want to look at many things but put money only into a few. I think you have to force yourself to be concentrated, however, because it doesn’t come naturally. It doesn’t come naturally for most people to put 25% of their or their fund’s net worth into any one thing.

If you study Charlie Munger’s track record or Warren Buffet’s track record, you will see that these guys have placed some very courageous bets. They have put a lot of their net worth into one investment. The psychological upside of a large concentrated bet just wasn’t high enough for them. Mr. Buffett could have said, “I’ve done 30% for nine years and I’m rich now, so just forget it. At least I’ll stay rich.” But it’s in his psyche to go and make a bet and to make a big bet when needed. So I think that concentrating your investments makes you work harder; it makes you stay true to yourself in the profession, which you need to be. And you eliminate complete forms of luck, because if you’re concentrating, then you can’t keep getting lucky. You have to be right about each large investment. But that’s something I’m struggling with to be honest. I am not concentrating enough.

I think it just forces your mind to look deeper and then have a higher conviction. And also work harder. Because it’s very easy to not work hard in this profession, and get lucky for a few years.

Like me!

No! (Laughter) I mean like me or anyone else. You can be a bum on a street and just get lucky for a year or so. I mean your track record is good because you started in ’08. But if you told me you were up whatever percent since ’09, in the bottom, I would say, “OK, well whatever.” But the fact that you started at the worst moment in ‘08 says something. Many times being contrarian just doesn’t pay off. As Buffett said in India, you shouldn’t always be depressed when everyone is excited and you shouldn’t always be excited when everyone is depressed. You should be selective about it. And a lot of the people who even made money from 2009, a lot of those guys have said, “Oh, the shit’s hit the fan, so I want to go buy.” And that is smart. It’s smarter than not buying, but that contrarian quality as a standalone, does not work as the chance of being lucky if one bought anything in 2009 is very high and that may give a false sense of achievement.

What is the process at your firm?

Well the first thing that happens is that I start every day with a lot of reading. I read all of the five or six major financial papers in North India. That’s a good time for me. I do that first thing in the morning and read, and just glance at everything. There might be an idea in the paper that I might like; there might be something a friend told me which gets reinforced in the newspaper, so I will read that. Then, I will look at some screens with the data there and will check into various kinds of rankings, and then I will just nibble at certain other things. That’s how the ideas come. Or, it could also be something that I looked into in the past, but I might just check the price again and check where we are. I just go one by one looking at it.

In two or three hours, if something has caused me to spend that much time on it, then it’s something that I am interested in. Then I dig deep and we pull up all the annual reports, look at all the 10, 15 year numbers, get public research to get data. And then, at the end of two or three days we will know whether or not we want to spend more time on this. I think that the key thing we look for is:

1. Can we understand how the business is going to make the cash flows that it is already making? Because the P&L are just numbers on a piece of paper. Can you visualize the thing in your head and say if he sells for this much, this much goes to cost and raw materials, this much goes here, there, etc.? And then you can see after a 10-year average that they have been OK, then you jump into the "what if" questions. What if raw materials double? What if the top two guys leave? What if there is labor unrest? What will competition do, etc.?

You get the idea. You just have to see the actual business in the numbers. That’s critical. Like a real estate building — if I wanted to own this restaurant, then I could spend 20 minutes here and count the number of seats. Look at the square feet and figure out how many hours a day we get traffic. Figuring out chef costs and all that, you can visualize that business. But now you suddenly say let us visualize 5,000 of these chains all over the world, and now they become numbers on a piece of paper. It is very difficult to visualize that data. So, we spend a lot of time saying no. We say we can’t visualize this. But in certain situations it is fairly simple. Or, it’s at least simple to say in a steady state this is what it will look like. And the business has to be easy to sort of visualize and understand.

2. Finding a business that is relatively clean is important. So the business should not be hinged on some sort of special favor to the business, some kind of irregular monopoly (if it’s legal it’s fine). It has to be something that is sustainable because of the merit of the shop or the people itself. So, in India there is corruption taint in many things. So we start to filter that entirely out.

Then, the last 10-year numbers should be good. It should be a well-run business on the numbers. I think what happens in a bullish phase like now, is that people stop worrying about what the guy is actually doing on the ground, but they start worrying more about how the guy is going to deliver, which is the grand essential point. Forget about what he’s going to do, and look what he’s done. That you already know. So, we spend a lot of time looking at what he’s done and it becomes clear to me. And if the numbers aren’t clear, then I’m not interested. The guy can do what he wants. It’s somebody else’s money to be had, but it’s not my money.

So once all of those check out, then we start “Scuttlebutting”. So in most situations we will make some calls and really do some spy work (which I love). I have done all sorts of things from interviewing ex-employees to a lot of things. And none of it is to get inside information, because we stay away from inside information, obviously. I am trying to verify a number; I want to know about the competitor; I want to generally know from where does this guy make all of his money? And sometimes you become surprised.

Nowadays it’s tough to find a screaming buy. Four years ago or back in 2009 there was stuff that was just screaming. Now it’s not screaming. But the evaluation process is pretty simple once we know all of this. We don’t have complicated Excel files. It’s mostly back-of-the-envelope sort of stuff. We do make some Excel files where there are a lot of subsidiaries or it’s a shipping business and there are many moving pieces. It’s scribbled in a physical file where I scribble everywhere, and if I can’t come to an answer by then, there’s no point.

So, once we cross that, if we like something then we go buy it. With respect to what the market is saying and what other people are saying stops mattering and we just put bids in. That’s the whole process.

And also it’s fairly cumulative. So, the fact that I have got companies in my research database from five years ago really helps me now. So now when some guy calls me from Hong Kong or the United States calls and says, “Have you heard of this company?” or “Have you heard of this guy?” I can just pull up a file and say, “Yeah, this is the history I have, this is what I found out about him then, this is good, and this is not good.” So that really helps. But it’s a fairly simple process overall.

It seems like you do everything. You definitely do your homework.

Well yeah, that’s the fun thing. I like doing homework. I mean we’ve had screw ups, but I do my homework.

To invest in foreign countries requires a deep understanding of the culture. For example, in Japan companies buy stock in other companies in lieu of cash payments, and liquidation is deemed a failure; what makes the corporate culture unique in India?

It depends on what kind of investing you are doing. If you are buying at the bottom of 2009 or 2003, you could just be a monkey throwing darts. And you will do okay because the tide is behind you, the business is growing, the country is growing, and all that helps. The judiciary is slow, which makes things complicated sometimes. Also many company managements are not shareholder friendly. But overall, it seems to be very similar to how the US was in the 50s and the 60s probably. Everyone in India is very entrepreneurial and most people speak English. They’re very enterprising like America. They are pro-business and they want to do business. We also have a good accounting system.

India is switching to IFRS accounting standards tomorrow. What until now were the accounting standards used, and what will happen?

We use Indian GAAP and we have our own accounting standards. Certain industries will change more with IFRS than others. Also, the chartered accountancy community, the guys who make the books, is fairly qualified. There is one institute, the ICAI, which gives you the ability to be a chartered accountant. And those exams are horribly hard. It’s not as bad as the IITs but it’s up there. In fact the CA exam (the chartered accountant exam), it’s called the “come again” exam. People fail multiple times. I mean if today I am interviewing someone who tells me he is a first-shot first-CA, that means he earned his CA exam in the first try. It’s a big, big plus. That’s how hard the exams are. They are much harder than the CFA.

So that helps. If I want to find out more about a business I will call the CA. Now in the US, the numbers are more real-time, so if there are marked to market losses you have to report that. And if there are marked to market write-downs and debt you have to report it. You report insider things, stock options, pension planning, all of that. All that is still coming in India. Reporting systems and accounting practices are not as mature as they are in the US, but if you want to research a $50 to $100 million company you can spend a day or two researching the numbers, and you will get a decent sense of the business from the accounting. You have to ask more questions though, and you can’t just trust the numbers. So in that sense, either you diversify or you cross out.

You say its 2003 or 2009, and you want to buy stocks at three times earnings, like South Korea (or whatever), and all net-nets and you aren’t worried about the quality of the numbers, and if you are diversified then you will do well. But if you want to invest now in India, then you have to kick the tires harder. Because the accounting standards there, gets you started, but to finish, you need to sort of get more conviction, so you must do your own homework. But the accounting is still much better than many non-English speaking countries. Language is a big barrier in other places. I mean, try understanding Italian books, you will go crazy. I think EBITDA in Italian is probably a sentence. (Laughter). I mean, all of those countries, Italy, France, Spain, Germany, parts of Mainland China, Russia, are all out. If you don’t speak the local language, then you’re done. Forget about translating the books and all that. But in India it’s all in English. You could pull up an annual report of a $70 million company, and everything is in English. And, they have proper receivables, and accounts payable, and you can see receivables over six months and under six months, and P&L, and it’s interesting. So it can be done. But if you want to put a big chunk of your cash in it you need to go down and drill hard and meet the management. This is important especially with a small company.

Is there anyway for small investors to do adequate research of stocks in India?

I think that they could but it would be difficult if they do not have a physical base on the ground. I think that if they do, they ought to diversify properly within the country and make sure that the basket is cheap, just to be safe. Or if they fall in love with something, they can always fly down; spend a week there and then they can get a sense of it. But it’s not un-doable.

Do you have any books that you recommend for people who want to invest in India or even understand the culture, economy, etc. that might give them a stepping-stone towards investing?

There are lots of books in India, but I haven’t found one that is “just right.” It’s just not there. Maybe you can come down and write one?

(Laughter) I don’t know if I’d be able to do that.

I have not found a great book on Indian value investing yet. If you want to understand how the country developed, there is a book called “India After Gandhi” by Ramachandra Guha. It’s a phenomenal summary of the country. This guy has won tons of awards, a New York Times best seller, this and that. So if you really want to learn about a country once and for all, this is the book. It just shows you the complexity of what India is. You will get this a lot; India just has a lot of facets. If you talk to somebody from the south, you will see a different facet, same with the north, east and west. We have regional, political, linguistic, caste-based, economic and ideological divides. I mean it’s even more diverse than the US, much more so. So that complexity builds into the businesses. Then there is “In Spite of the Gods,” by Edward Luce and also “India Unbound” by Gurucharan Das.

There was a front-page WSJ yesterday about the growing income inequality cap in India and stating the serious problems the country faces. What are your thoughts on the macro picture?

I haven’t read the article, yet but I think the ability for someone to make money individually and independently has gone up exponentially in India. If you think of the top 10 richest guys in India, I would think that probably half of them are self-made. Over maybe a 20- or a 30-year career, but they are still self-made. It shows that the dynastic wealth is going down. I think that people are going to get fabulously rich in that country, and we don’t even know who they are right now.

Of course, we have serious problems with those who are extremely poor. Indian governments will always want to subsidize, because we have some really poor sections. But agriculture growth and the capitalistic pressures are sort of bringing them out of poverty, and then we have aid coming in from the government which is helping a lot. Also, philanthropy as it increases over the years will help out with basic education, improving standard of living, mortality rates, longevity, and things like that. These will be slow changes, maybe 10- or 20-year changes, and you won’t see them now.

The income distribution between the middle class and the upper to the middle class is there, and you will see that in any country; it’s heavy. In a way its good because it leaves plenty of room for aspiration. But, it’s sometimes frustrating because if you are unethical or immoral you can make a lot of money. It’s a bit like Russia in regards to certain industries and certain regions. That should change.

I’m not a big macro guy. But I do think that the tide has turned and we’re going to be increasingly capitalistic. Every five or ten years there will be a few shocks here and there. India is a bit hyped. I mean it's 2 or 3% of world GDP? Its per capita GDP is below many African countries. It’s a buzzing market though. Ebbs and flows will happen, but the growth is there. It’s very tough to dislodge that now because people have seen how that works and that it makes sense.

I’m not ruling out three years of problems where nobody looks at India, but it will bounce back. I think it’s a sustainable growth in India. The economy is very domestic consumption oriented. An Indian today is increasingly buying an Indian shirt, an Indian watch and an Indian car. Also all of the services are domestic. Tech is also domestic. In the US, many things are made in China.

This country is great. I love the USA. This is where I would live if I didn’t have a home in India. It’s got the ability to allocate the right job for the right person in a free moving economy. It’s got the potential to keep unlocking. It’s not anywhere else in the world. It’s stupid to write them off. India is a thousand dollar per capita country and yet America has made India believe that it’s going to conquer America in 30 years, 40 years because of GDP growth. It’s stupidity. It’s amazing how the US has gone to the underdog mindset and said, “Oh we won’t be able to fight China or India.” If you’re a young guy, then Obama tells you that you are fighting with the Chinese for your jobs. It’s the underdog mindset. Per capita GDP in the US is $47,000 a year. In India its $1,200 and in China it’s $4,000. Who are we kidding? I don’t believe those stupid reports that claim in 2050 India will overtake the USA in terms of total GDP. Goldman could write it or anyone could write it and I won’t believe it.

Who knows right? There are hundreds of decisions from now to then that would have to come right for that to happen. But, can I say that it will be a much larger country than it is today, GDP wise? Absolutely.
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