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Nikhil KamathNikhil Kamath

India vs. China vs. US: Who Wins the Next Decade? | WTF is Finance | Ep 1 ft. Ruchir Sharma

Ruchir Sharma thinks America’s peak is over. In this episode, I sat down with the author and investor to discuss the forces shaping the world’s economy, where India fits in the new world order, and all things geopolitics. Timestamps: 00:00 - Intro 2:45 - Early life & formative years 6:50 - What India can learn from Singapore & China’s models 11:33 - Premature welfare state: growth or mistake? 17:47 - Social mobility, elections & incumbency 27:06 - Does meritocracy create inequality? 31:29 - Why govt. bailouts hurt the private sector 33:50 - Regulation, crypto & blockchain 44:06 - Tariffs & free trade 49:12 - Affordable housing & property taxes 56:55 - Does India need a dogecoin? 1:02:00 - State vs. central govt. in India 1:09:07 - Putting corruption into perspective 1:15:03 - UBI & AI’s potential 1:25:37 - Interaction with Putin 1:32:35 - Journalism, free speech & media ethics 1:41:43 - Short selling: risks & rewards 1:43:47 - How Ruchir found his passion 1:53:26 - Validation & defining happiness 1:57:28 - FDI & how India can boost growth 2:06:44 - US: Superpower no more? 2:11:31 - Geopolitics: India, China & US 2:18:28 - American tech & patriotism 2:21:55 - Small cap boom & retail investors 2:30:56 - China today: politics & economics 2:37:26 - The thesis of American exceptionalism 2:40:28 - India’s 10 year playbook: wages vs. assets 2:48:35 - Private, public & emerging markets 2:52:48 - Tomorrow’s big trends #NikhilKamath - Investor & Entrepreneur Twitter: [https://x.com/nikhilkamathcio](https://www.youtube.com/redirect?event=video_description&redir_token=QUFFLUhqbm9WZVh3cHVTX3JEeGptVjlOZ1R3cW5rVkZJUXxBQ3Jtc0tuekFjWnRXME9XUUVLcDNCTk9YcHd5OU1MV1NMamE0cWE1T25meGJ4VWRMa21OY3VYLWM2T05iOUJtYTNWbWRSLW5YUXNzTTRHUUpjOGdZSGJzNEYxMkt2Y2hmWVNUeU51Nk5MRFVieVNtSTJwMkFXZw&q=https%3A%2F%2Fx.com%2Fnikhilkamathcio&v=wHQiewz8k9g) LinkedIN: [](https://www.youtube.com/redirect?event=video_description&redir_token=QUFFLUhqbGNsNjlxS2NyU3VxOUNIQU1VUmczaWNobmtJd3xBQ3Jtc0tsVmczaDdwdkpMZWlNaVdISk1mQUFfbmhZNVB2al9OU1hwbF9rYTFoMFJGN2FKRnFreXFEaXZhRGttd2xLRHBpQVhIS19XaW5wQTZ3UjB6bm5vazVmdUkwSEdsU0MxS1lXYmJvVnhlekVRczc0RmdTRQ&q=https%3A%2F%2Fwww.linkedin.com%2Fin%2Fnikhilkamathcio&v=wHQiewz8k9g)https://www.linkedin.com/in/nikhilkamathcio/ Instagram: https://www.instagram.com/nikhilkamathcio/ Facebook: https://www.facebook.com/nikhilkamathcio/ #RuchirSharma - Chairman of Rockefeller International and Founder and Chief Investment Officer of Breakout Capital Website: https://ruchirsharma.com/

Ruchir SharmaguestNikhil Kamathost
Sep 3, 20252h 59mWatch on YouTube ↗

EVERY SPOKEN WORD

  1. 0:00 – 2:45

    Intro

    1. SP

      [upbeat music]

    2. RS

      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. [upbeat music]

    3. NK

      Will our visas get canceled if we say why Americans are un- unhappy?

    4. RS

      [laughing]

    5. NK

      [laughing]

    6. RS

      I hope not. I'm not sure we've gone that bad as yet in America. [chuckles]

    7. NK

      Is there a line?

    8. RS

      [upbeat music] I think Bitcoin is here to stay. Crypto is here to stay. This has lasted long enough. It's getting mainstream. Uh-

    9. NK

      You think so?

    10. RS

      Yeah. Whether it's banks or-

    11. NK

      Mm

    12. RS

      ... asset management firms who told you five years ago, "We'll never touch this thing."

    13. NK

      Have you got an allocation? [upbeat music] Hi, Ruchir. Thank you for coming. Uh, you've been on this table before.

    14. RS

      Yes.

    15. NK

      You've had lunch here before, so I hope you feel slightly more comfortable than you might in a new place altogether.

    16. RS

      Yeah, I think that's, uh, fair. I mean, in terms of... Although the approach to the apartment is, uh, a bit of a project, but otherwise I feel okay.

    17. NK

      Ah. Has something changed?

    18. RS

      Uh, in what way?

    19. NK

      Approach to the apartment.

    20. RS

      No, no, no, I just think [chuckles] that even last time because of the fact that this is a big complex here, right?

    21. NK

      Yeah.

    22. RS

      So in terms of the fact they're getting this specific B2 location-

    23. NK

      Yeah.

    24. RS

      -in terms of the coordinates.

    25. NK

      No, I thought-

    26. RS

      Yeah

    27. NK

      ... because of the Ganesha thing, maybe you got stuck on the way.

    28. RS

      No, no, no, it was fine today.

    29. NK

      No traffic?

    30. RS

      No, I mean, it's pretty good.

  2. 2:45 – 6:50

    Early life & formative years

    1. RS

      part of town.

    2. NK

      Maybe we can start there. Actually, I've never asked you the origin story. How did you begin? Where were you born? I know you just said your dad was in the Navy, but what else? Mm.

    3. RS

      So because of that, what happened was that we had a very nomadic existence-

    4. NK

      Mm

    5. RS

      ... which is that every two years, uh, my father would be transferred, and because he'd be transferred, we would go along, uh, wherever he went. So I was born in, uh, Wellington. Coming up, uh, in terms of I was speaking with my, uh... you know, with our friend, uh, Nikhil, who was, like, te- telling me about how they spend a lot of time there now.

    6. NK

      Yeah.

    7. RS

      And, uh, I need to go back and, and revisit Coonoor. Uh-

    8. NK

      So Nandan, Kiran, Gitanjali, Premji, I think they've all bought houses in Coonoor.

    9. RS

      Yeah.

    10. NK

      Uh, and Nandan's house actually is the place where... Who's the guy who came up with the Turing test?

    11. RS

      Was it Alan Turing or something like that?

    12. NK

      Yeah.

    13. RS

      Yeah. That's right.

    14. NK

      So his parents lived in Nandan's house in-

    15. RS

      Yeah

    16. NK

      ... Coonoor.

    17. RS

      Yeah.

    18. NK

      Yeah.

    19. RS

      Yeah.

    20. NK

      And they actually go there a lot. Nandan, and Kiran, and all, they keep sh- uh, sharing stories about the Coonoor Club.

    21. RS

      Yes.

    22. NK

      So me and Kiran live in the same apartment complex in Bangalore.

    23. RS

      Yes.

    24. NK

      And me, Nandan, and Kiran, we all tend to catch up once every month or once every two months.

    25. RS

      Okay.

    26. NK

      It's like a Bangalore group.

    27. RS

      Yeah, I know.

    28. NK

      Yeah.

    29. RS

      So, like, it's become a complete outpost for the Bangalore club.

    30. NK

      Yeah.

  3. 6:50 – 11:33

    What India can learn from Singapore & China’s models

    1. NK

      So you've seen India's socialism in a way, growing up?

    2. RS

      Yeah. So I saw India's socialism and the, and the contrast with Singapore was-

    3. NK

      Mm

    4. RS

      ... really remarkable.

    5. NK

      Mm.

    6. RS

      Because Singapore was going the opposite way.

    7. NK

      Mm.

    8. RS

      Which was that it was giving its people as much economic freedom as possible, and it was developing very rapidly.

    9. NK

      In a very communist manner, though, right?

    10. RS

      No. Um, I wouldn't say c- communist, but some people would say authoritarian.

    11. NK

      Right.

    12. RS

      Which is the fact that it didn't have... That some people would say, like, it wasn't a true democracy.

    13. NK

      Mm.

    14. RS

      It was a one-party system where they had elections, but-

    15. NK

      Isn't it still largely like that?

    16. RS

      Yeah, but it's, like, changed a bit. I mean, there's been more sort of political freedom compared to what it was in the 1980s.

    17. NK

      Mm.

    18. RS

      But that model is very much the Singaporean model-

    19. NK

      Right

    20. RS

      ... in terms of the fact that even as they've become a rich nation, they are still largely governed the same way. So anyway, so Singapore was there, but it was a shining s- uh, example of economic success already by the '80s.

    21. NK

      Mm-hmm.

    22. RS

      And as you said, it was a big contrast. Well, so you know this word communist, I think, is wrongly used, uh, like sometimes because we- even China, we think of communist, right? Uh, which it is from a political standpoint. But from an economic standpoint, China and Singapore especially then, were far more, uh, free than India. Uh-

    23. NK

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

    24. RS

      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 1980s. Uh, you know, people would, uh, usually associate India's opening up in 1991, right?

    25. NK

      Mm-hmm.

    26. RS

      When the big reforms took place with Narasimha Rao, Manmohan Singh.

    27. NK

      Mm.

    28. RS

      But there was also a phase in the, uh, in the, in the '80s when the first phase of opening up in India happened.

    29. NK

      Mm.

    30. RS

      The peak of Indian socialism was 1970s, when everything was virtually controlled by the government. And then India ran into a financial crisis in the early 1980s, and under partly the pressure from the IMF, the, India began to gradually open up. Uh, but, uh, yeah, the 1990s 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.

  4. 11:33 – 17:47

    Premature welfare state: growth or mistake?

    1. RS

      case.

    2. NK

      I was watching this interview between Tucker, Tucker Carlson and a Chinese lady. [clears throat] Very interesting. She was speaking for Deng Xiaoping, and she said the manner in which he, he brought 500 million people out of poverty in a way, given the same... This is a bit controversial, but she was saying, "If one were to give Mother Teresa the same amount of money, most of those 500 million people would still be in deep, abject po- poverty in a way." Do you think that kind of a model of welfarism is bad for a country like India?

    3. RS

      I think that if you look around the world, and this is something which I've seen, that creating a welfare state prematurely can be one of the biggest mistakes any developing country can make. And you can see this. Latin America did that. Latin America, you know, like all these countries, uh, for example, the 1960s, Korea, India, Brazil, they all had similar per capita income, which means that they were similarly rich or poor, uh, whichever way you wanna look at it. But then co-... Korea really took off, Brazil kept on stagnating, and India took a very long time to get going. But the biggest mistakes that I, I think that Brazil made, and this is my point, that creating a welfare state prematurely, where the state just spends on, you know, uh, people, um, by giving them freebies and giving them a lot of, uh, um, uh, subsidies and stuff, I think is a mistake. Whereas the way that growth is created-

    4. NK

      Mm-hmm

    5. RS

      ... is by creating the infrastructure. That you create the infrastructure and then let people thrive and do what they want with that infrastructure, which means build the roads, build the ports, build the, uh, you know, highways, and, a- and stuff. So that's what the East Asian model was. No welfare state to start with. Spend... Whatever the gov- government spent on, it spent on building infrastructure, and then you create the welfare state later. Which is that once you have enough money and people have enough e- uh, you know, sort of, uh, income, then to cushion them in the hard times, you create a welfare state. And that was also something which happened in the, in the West as well. Uh, that if you look at America or UK and stuff, they followed what we call the Dickensian form of capitalism, after Charles Dickens, all the m- books we read as kids and stuff-

    6. NK

      Mm

    7. RS

      ... Oliver Stone and all these things. It showed what the abject poverty used to be, uh, at one level, and how the rich used to really sort of rule. Uh, in fact-

    8. NK

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

    9. RS

      I think that India has always sort of the risk that, that... Why India will never achieve a growth rate like China-

    10. NK

      Mm

    11. RS

      ... of 9 or 10%.

    12. NK

      Mm-hmm.

    13. RS

      You know, like, in terms of we have, I think, all now reconciled to the fact that we are a 6%-type economy. The ambition of growing at 9, 10%, I think doesn't even exist anymore.

    14. NK

      Mm-hmm.

    15. RS

      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, uh, runaway growth to take place, which requires very little welfare, and on... and any government spending on infrastructure, and also very little protection from, uh, you know, what's happening, uh, 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.

    16. NK

      Mm-hmm.

    17. RS

      So that's the br- reason why India is unlikely to ever grow at 9, 10% on a sustained basis, which East Asia did, and why we are now reconciled to growing at 6%. That type of growth rate is what we are, sort of seems to be what we are comfortable with.

    18. NK

      When you look back at things like customs duty or tariffs, back in the day when, say, the British had their Industrial Revolution originating from Birmingham, the reason why things like that could happen is for a short period of time, they blocked out external economies so domestic industry could thrive.

    19. RS

      Right.

    20. NK

      Now, if we were to remove that and make it a fully free market, and a Chinese product and an American car can compete here, will that allow for domestic industry to thrive? Or should we go by the Birmingham model and kind of lock things away for a while, allow for domestic innovation to come about, and then open things again?

    21. RS

      But we tried that.

    22. NK

      Mm.

    23. RS

      We tried that in the 1960s, we tried that in the 1970s.

    24. NK

      Mm.

    25. RS

      It was called, something called import substitution, which is exactly what you're referring to, and it didn't work.

    26. NK

      Mm.

    27. RS

      It left us very uncompetitive.

    28. NK

      Mm.

    29. RS

      Uh, you know-

    30. NK

      Why did it work there?

  5. 17:47 – 27:06

    Social mobility, elections & incumbency

    1. RS

      the difference.

    2. NK

      I've heard you say earlier that there is no real social mobility in society, not just in India, but across the world. And whatever research I could have done on that or whatever I have read about it historically, uh, people say that the surnames, for example, of rich British folk a thousand years ago, if you were to see how well they're doing today, they're still in the affluent section of society. So barring social mobility in a pragmatic sense in society, if not for welfare and subsidies, what happens to society at large?

    3. RS

      No, but the, the point that you're referring to, which is what I wrote in my latest book, What Went Wrong with Capitalism, is that social and economic mobility in Western societies has declined in the last 30 to 40 years. So it's not as if it was never there. You had, but that's declined, and that is one of the main reasons why so many people in the West today are very unhappy.... in general with their life-

    4. NK

      Mm.

    5. RS

      -because they find that it's very difficult for them to move up the ladder the way that they could.

    6. NK

      Mm.

    7. RS

      Like in America, for example, uh, like, as I've cited some of the, uh, like, this work, uh, that only about, uh, 30 to 40% of Americans today feel that they can have a better life than their parents. Uh, but back in the '50s and '60s, when the American Dream was really shining, every American thought, or at least 70 to 80% of Americans thought, that they, you know, they could have a better life than their parents.

    8. NK

      You also made a case for no home ownership as one of the reasons why they are so unhappy-

    9. RS

      Yes

    10. NK

      ... especially the youth in America.

    11. RS

      Yeah.

    12. NK

      But do you think that's true also for India? Do you think there is- if you were to ask an average Indian if they will do better off than their, than their parents, would they say not today?

    13. RS

      No, I think-

    14. NK

      And do you think social mobility is lesser here or more here?

    15. RS

      I think more here now.

    16. NK

      Yeah.

    17. RS

      You know, in terms of... I think that in India, the aspiration levels have a- have increased. I think that any of us who have a memory of, what the 1970s, '80s, or even, you know, like, even 20, 30 years ago, I think most of us will feel the India of today, uh, at least from an economic perspective, is better than the India of 20, 30, 40 years ago.

    18. NK

      Right.

    19. RS

      In the West, it's gone the other way, that there's a much greater longing for what society and what the economies used to be.

    20. NK

      Mm.

    21. RS

      So I think there's a big difference between emerging markets and in, and in some of the developed countries here. And this is also shows up in the politics, because what's happened is that the politics has inverted as well. That if you look at the Western countries today, uh, most governments lose election-

    22. NK

      Mm

    23. RS

      ... uh, there. Uh, whereas in emerging markets, in developing countries of late, most incumbents are winning their elections.

    24. NK

      Mm.

    25. RS

      Uh, which is a big difference that's happened. It used to be the other way around, which is that in the Western countries, most incumbents... Because you, if you're already incumbent, you have the advantage, if you're already, people know you, you have the, you have the media and other access and stuff, then you're at a natural advantage, uh, like, to win. Now, it's gone the other way, and, and in many emerging markets, including India, it's become now much more, like, in terms of the incumbent-

    26. NK

      Mm-hmm

    27. RS

      ... is not gonna be thrown out like the way they used to be.

    28. NK

      Mm.

    29. RS

      That's a big change that's happened in, uh, in society, which shows up in politics, too.

    30. NK

      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.

  6. 27:06 – 31:29

    Does meritocracy create inequality?

    1. NK

      To put, like, a pin on the social mobility thing, because I think it's very important. So social mo- mobility, when we are speaking about it, is somebody who is not privileged climbing up the economic ladder.

    2. RS

      Right.

    3. NK

      Uh, there's a very interesting concept around this. Uh, it's called The Great Gatsby Curve.

    4. RS

      Mm-hmm.

    5. NK

      Where the author explains it in a manner that the more the income inequality in a society, the more the people in that society believe in meritocracy. Do you see that at play?

    6. RS

      Yeah, I think so. I think that's true. Uh-

    7. NK

      Why is that? That, that seems very counterintuitive, right?

    8. RS

      See, capitalism is not about equal outcomes. You will not get equal outcomes in capitalism, but you have to have a feeling of equal opportunity.

    9. NK

      Mm.

    10. RS

      Uh, right? Uh, and there's a very key distinction between this, that they- they should feel y- you have an opportunity. Outcomes will be unequal because capitalism, by definition, is gonna favor those who are supposed to be more meritocratic and, and stuff.

    11. NK

      Yeah.

    12. RS

      So it'll naturally tend towards inequality.

    13. NK

      Mm.

    14. RS

      But the issue is that, can you feel that I have a chance, despite coming from a not a great background, of making it in this country or not?

    15. NK

      Mm.

    16. RS

      And the great thing about America was, and that's what attracted even people like me there, that you felt that you could get there-

    17. NK

      Mm

    18. RS

      ... and regardless of your background-

    19. NK

      Mm

    20. RS

      ... you had a shot.

    21. NK

      But that's ironic, because education is not really democratic in America, so it's not equal opportunity if education is as expensive as it is there, right?

    22. RS

      It's become like that over time. That's one of the reasons.

    23. NK

      Mm.

    24. RS

      The grievance of people is because, over time, these gaps have increased a lot more. Uh, you know, where you feel like you can't, uh, the... That social mobility has gone down because you can't move from one city to another that easily as you, like, used to be able to move. So I think that these are trends which have progressed over time. This, the- now, now you're getting to the point about what's the root of the anger in America? Why are so many people unhappy with what the system at place is? Because of these trends that have played out over time.

    25. NK

      Mm. Will our visas get canceled if we say why Americans are un- unhappy? [laughing]

    26. RS

      [laughing] I hope not, because I mean, in terms of-

    27. NK

      You live there. [laughing]

    28. RS

      Yeah, exactly. So, uh, but, uh, I'm not sure we've gone that bad as yet in America. [laughing]

    29. NK

      Is there a line?

    30. RS

      For?

  7. 31:29 – 33:50

    Why govt. bailouts hurt the private sector

    1. NK

      So to close the social mobility topic, no welfare, no subsidies, equal opportunity in education, would you say? Would you put it that way? Do you think education is getting democratized by virtue of things like what we are doing now? This will be available freely online somewhere.

    2. RS

      Yeah.

    3. NK

      Your books don't cost a lot. I'm sure free PDFs of them are-

    4. RS

      Yeah

    5. NK

      ... available wherever one might want to seek them. What else needs to change to have increased social mobility in our communities?

    6. RS

      No, as I said, that in terms of the fact that also I feel the single-most important thing is less government bailouts and intervention.

    7. NK

      Yeah.

    8. RS

      And this has been a big sort of, you know, point of mine that I've made.

    9. NK

      Not so much in India, right?

    10. RS

      Yeah, not so much in India, but even in India, uh, in terms of that the government should not be bailing out private sector companies, and should sort of, you know, keep... Because I think that that creates an impression that the government is favoring the incumbent.

    11. NK

      Mm-hmm.

    12. RS

      Because w- because after all, if companies are failing, it's, it's, you know, in terms of the fact that they tend to be incumbents.

    13. NK

      Mm-hmm.

    14. RS

      And the moment you do that, then you're preventing new companies from entering.

    15. NK

      Mm-hmm.

    16. RS

      So I think that, like, it's very critical that any government, including in India, does not bail out private sector companies. And also the fact that government, you know, like favoring a few companies, for whatever reason, I think l- leads to less economic and social mobility. Because then you sort of... You know, like the average person feels, even in India, there is this, uh, like a feeling that some of the big conglomerates are capturing too much of the economic share in India.

    17. NK

      Mm-hmm.

    18. RS

      Uh, businesses don't talk about this openly, but you speak to a lot of people, there is a feeling, uh, and, and, and it's partly because of the regulatory environment. Which is the fact that, in like mid to small-sized companies often say, "We're better off selling, you know, to these big companies who can manage all this tough regulatory environment. It's tough for me to negotiate this, uh, directly." So, uh, what will help is deregulation, right?

    19. NK

      Mm-hmm.

    20. RS

      That if we have a lot of deregulation, then you are allowing more companies to come up on their own. But the more regulation you have, the worse it is, because then the big companies are able to game the system. They can write the regulation what, uh, like in the way they favor it, and also because then it, it costs so much to negotiate this regulatory environment, that a small and mid-sized company or a small and mid-sized business person, they find it very difficult to do

  8. 33:50 – 44:06

    Regulation, crypto & blockchain

    1. RS

      that.

    2. NK

      I've heard you make a case in America that there are 3,000 new regulations that come about. What do you think-

    3. RS

      Every year.

    4. NK

      Yeah, and-

    5. RS

      Yeah

    6. NK

      ... only 20 have been removed in the last-

    7. RS

      In 20 years.

    8. NK

      In 20 years. [chuckles]

    9. RS

      Yes.

    10. NK

      Yes. What do you think the case is in India for regulation and deregulation?

    11. RS

      I think that the case is the fact that everyone wants to regulate because you believe that, you know, you wanna keep out the bad actors and you wanna favor this. But every time a policy maker introduces a new regulation, remember that regulation, by definition, tends to be pro-incumbent.

    12. NK

      Mm.

    13. RS

      Whoever the p- person in power or the, the company which is already established, regulation 90% of the time favors those people. So I think that is the very fundamental principle that has to be behind policymaking, that if you do regulation, you are favoring the incumbent. And by doing that, you're disadvantaging the new people who want to come into the system.

    14. NK

      Either directly or indirectly by taking the margins of that business down?

    15. RS

      Uh, no. In terms of the fact that by, as I said, that because, yeah, uh, that the new companies or let's say like the small, mid-sized companies, they find it much more difficult to deal with the regulatory environment compared to the big companies. At two levels: one, the cost-

    16. NK

      Mm-hmm

    17. RS

      ... of, of, uh, complying with regulations, right? That's a big burden.

    18. NK

      Mm-hmm.

    19. RS

      And two, is the fact that the big companies, they're able to lobby and get bills written and other rules written in a way that favors them, which the small and mid-sized business people cannot do.

    20. NK

      Okay, fair point. Uh, you saw the recent regulation on real money gaming in India. What are your thoughts on that?

    21. RS

      I'm not sure, because, you know, like, I have mixed views, because I know that there's... Like, in terms of, I'm for deregulation as much as possible.

    22. NK

      Mm-hmm.

    23. RS

      But there, there is a bit of an issue coming about, you know, what it's doing for, in terms of what it's doing for, uh, the mind space of the young generation and stuff.

    24. NK

      Yeah.

    25. RS

      But generally, I'm not in favor of regulation, uh, because I just feel that 90% of the time it kills entrepreneurship-

    26. NK

      Mm

    27. RS

      ... it undermines the rise of new things. So, and, uh, I don't have specific views on-

    28. NK

      Mm-hmm

    29. RS

      ... on one thing. I'm a bit distant from that, but I would say that my gut on these things is that every time I've seen regulation come in, I think it's been bad for the country.

    30. NK

      Fosters the black economy, in a way?

  9. 44:06 – 49:12

    Tariffs & free trade

    1. RS

      Yeah.

    2. NK

      Do you think tariffs are good, net-net?

    3. RS

      Uh-

    4. NK

      Are they only reciprocating what other countries have done to them for a long time, or is there a case to be made for why it could be good for them?

    5. RS

      Well, I think that, uh, there are two points here. One is the fact that if they had done strictly reciprocal tariffs-

    6. NK

      Mm.

    7. RS

      Firstly, we don't know what science is behind this, right? I mean, in terms of the fact that generally from a pure economic perspective, tariffs aren't great. Uh, and there's so much economic theory to back that up. Now, you can argue that all economic theory is wrong-

    8. NK

      Right

    9. RS

      ... but all the economic theory says that free trade benefits countries the most, and that's the system we've had in place for the last 50-odd years or so.

    10. NK

      Right.

    11. RS

      Uh, you know, so why shouldn't... Yeah, like, in terms of it has helped many countries develop very rapidly because of the lack of tariffs.

    12. NK

      But does it also benefit the incumbents more than it does the emerging players?

    13. RS

      What?

    14. NK

      Free trade.

    15. RS

      Uh, no, but I'm... Because if you look at the world in terms of it-

    16. NK

      'Cause if, if the manufacturing base, say, got set up in China, and they're producing 500 million TVs, as long as free trade continues, nobody can match the cost efficiencies that producing 500 million TVs brings to them, and they continue to scale and the other countries can't catch up?

    17. RS

      No, but this has changed over time, right? Because-

    18. NK

      Historically, yes

    19. RS

      ... Yeah, first it was Japan.

    20. NK

      Mm.

    21. RS

      Then it was Korea, Taiwan, uh, you know, like, and, and these other, uh, economies, and then it became, uh, China.

    22. NK

      Mm.

    23. RS

      So this thing has changed over time. It's not been as if this has all been, like, China's advantage for very long.

    24. NK

      Right.

    25. RS

      Uh, China's export share has gradually increased over time.

    26. NK

      Mm.

    27. RS

      Uh, thank you. So this is not, uh, uh, as if China was always, like, the dominant player here.

    28. NK

      Right.

    29. RS

      This is so, if, uh-

    30. NK

      Do you think they did the reverse of a tariff, and they artificially subsidized many things in the country to arrive at this position and displace Japan from where they sat?

  10. 49:12 – 56:55

    Affordable housing & property taxes

    1. RS

      say.

    2. NK

      Right. To increase social mobility-... focus on equal opportunities, not equal outcomes, no bailouts, democratize education, no welfare state-

    3. RS

      Yeah.

    4. NK

      No subsidies.

    5. RS

      Yeah.

    6. NK

      I've written down home prices need to somehow become affordable. How does that happen?

    7. RS

      Um, by just allowing supply, because in, what's happened in the West and other places is that the supply of homes is very limited because of regulation and other things. Very difficult to construct new places, like homes, and you face massive amount of also, uh, in terms of, uh-

    8. NK

      You think that's why homes are not affordable because of regulation curtailing supply?

    9. RS

      In the West, for sure.

    10. NK

      In India?

    11. RS

      In India, I think it's a bit more complex.

    12. NK

      Mm.

    13. RS

      Because... But I think that in terms of that, like, h- uh, that home affordability in India, I know that anyone hearing this will say that, yeah, you know, like, the homes are expensive. But if you really look at many metrics in India, ho- uh, like in terms of it's not as expensive relative to income as you find in some of the other countries in, like, in the world that I go to. So it's true that, yes, that in India in terms of also, uh... But regulation in the West, for sure, has been the single big- biggest reason why homes have become so unaffordable. 'Cause sup- there's no supply. In fact, there's one stat that someone told me about, one of the large private equity [chuckles] firms, in fact, that the number of new homes that America builds today is the same as... a year, is the same as it was in the 1950s and '60s, even though the population is 50% higher. It's impossible to get proper, you know, like, permits, and, and once you build a home, then you have to face so much legal challenges if something goes wrong and stuff. So the supply of homes being limited is, I'd say, the leading reason for why homes have become unaffordable.

    14. NK

      Okay, I'll add deregulation to it.

    15. RS

      Yeah.

    16. NK

      Home prices need to be affordable, maybe via deregulation or other means for India. What else to increase social mobility? Would you make a case for something like property taxes?

    17. RS

      I don't see how property taxes, because, uh, you know, would increase... I know some people would also talk about inheritance, uh, tax and stuff. As I said, that these have been tried in other countries ha- and hasn't really worked. And property tax, I mean, I've seen work on inheritance tax, but I'm not sure how property tax would, uh, increase social mobility. Uh, I've not seen any work to back that up.

    18. NK

      Large property holders. I'm, I'm making an extrapolation, thinking, okay, we used to have a big black money economy.

    19. RS

      Yeah.

    20. NK

      A lot has been done to curtail it.

    21. RS

      Yes.

    22. NK

      A lot of the black money is sitting in property. Government has finite revenues today. How do you increase revenue to work on the other stuff? Maybe property tax.

    23. RS

      Yeah. I mean, I, I doubt if in a country like India... As I said, in India, the success of having more taxes is-

    24. NK

      Mm

    25. RS

      ... is really counterproductive. Even today in India, the, uh, most people would sort of agree that, that just complying with tax is still a big challenge here.

    26. NK

      Don't you think we are at about average now? Tax-to-GDP ratio is, say, 11, 12% federal level.

    27. RS

      Yeah.

    28. NK

      If you add states, it maybe goes up to 17, 18%.

    29. RS

      Yeah, that's good for-

    30. NK

      That's comparable-

  11. 56:55 – 1:02:00

    Does India need a dogecoin?

    1. NK

      mobility in the country.

    2. RS

      Yeah. In fact, you know, one of those things I know that, and I know this for a fact, that when, um, uh, Elon Musk was set up to do DOGE-

    3. NK

      Yeah

    4. RS

      ... in America, there was a lot of outcry about it, right?

    5. NK

      Yeah.

    6. RS

      That, "What's he doing?" and stuff.

    7. NK

      Yeah.

    8. RS

      But a number of my friends in India-

    9. NK

      Uh-huh

    10. RS

      ... including so-called liberals, right?

    11. NK

      Yeah.

    12. RS

      You know, who we say, who were, like, really saying that, "Yeah, India needs DOGE."

    13. NK

      Mm.

    14. RS

      You know? That why can't we get DOGE?

    15. NK

      Mm.

    16. RS

      Uh, and I think that the, that even when I speak to some of the other people who are true-

    17. NK

      Mm

    18. RS

      ... uh, you know, free marketeers in this country-

    19. NK

      Mm

    20. RS

      ... I think DOGE is what, DOGE is what really caught the imagination of a lot of people. So-

    21. NK

      Why do you think DOGE was against free market capitalist?

    22. RS

      No, I'd say that DOGE is very much something which I, uh, uh-

    23. NK

      You're for.

    24. RS

      I'm for.

    25. NK

      Right.

    26. RS

      I'd say that DOGE captured the imagination-

    27. NK

      Yeah

    28. RS

      ... of a lot of people around the world, in fact.

    29. NK

      Would you make a case for India to do something like that?

    30. RS

      Absolutely.

  12. 1:02:00 – 1:09:07

    State vs. central govt. in India

    1. RS

      Yeah. No, I'd say that this can be done.

    2. NK

      Mm.

    3. RS

      The other stuff of not having a welfare state, et cetera, that's all theoretical.

    4. NK

      Yeah.

    5. RS

      There's no way that's happening.

    6. NK

      Yeah.

    7. RS

      Right. And the other thing which I feel is the fact that w- now, uh, I keep saying this, that the one thing I feel very positive about India, we tend to focus, I feel, a bit more in Delhi, Bombay-

    8. NK

      Mm

    9. RS

      ... on the center.

    10. NK

      Mm.

    11. RS

      Which is that, what is the center doing?

    12. NK

      Mm.

    13. RS

      Uh, in terms of that, you know, what is the Modi government doing and stuff?

    14. NK

      Mm.

    15. RS

      One very big positive I feel in India is that the, is that we are a truly federal country at some level.

    16. NK

      Mm-hmm.

    17. RS

      And the s- the real execution happens at a state level. State chief ministers in India have a lot more power than other countries that I know of, where the provinces and stuff... And I feel that there's a very good competitive environment between states, and what the center, i- if at all, and, and again, Prime Minister Modi used to speak about this a lot when he was the Gujarat chief minister, was the fact that: how do you create a much more competitive federal system?

    18. NK

      Yeah.

    19. RS

      You know, where s- states compete with each other.

    20. NK

      Yeah.

    21. RS

      And you see that.

    22. NK

      Like it happens in China with mayors of different townships.

    23. RS

      Yeah. But, but in India's case, there's a, there's even greater scope for that.

    24. NK

      Mm.

    25. RS

      And I think that we... Yeah, we see that. Like, I was speaking to a leading businessman today, in fact-

    26. NK

      Mm

    27. RS

      ... and, uh, what he was telling me was, you know, like, uh, uh, like he heads a large conglomerate, "That if I set up a factory in a particular state-

    28. NK

      Mm

    29. RS

      ... I instantly get phone calls from five chief ministers-

    30. NK

      Yeah

  13. 1:09:07 – 1:15:03

    Putting corruption into perspective

    1. RS

      is spread much more. Uh-

    2. NK

      Do you believe corruption is a bad thing?

    3. RS

      It's a cliche.

    4. NK

      Yeah.

    5. RS

      Every country faces corruption.

    6. NK

      Yeah.

    7. RS

      There's no country I go to... I was in Indonesia last week, as I mentioned.

    8. NK

      Yeah.

    9. RS

      Corruption, corruption, the people talk about.

    10. NK

      Yeah.

    11. RS

      But-

    12. NK

      America, lobbying is legal.

    13. RS

      Yeah, but I think we have to put corruption in its proper perspective-

    14. NK

      Mm

    15. RS

      ... which is that generally the thing is that the, the less poor a country gets and the richer it gets, generally corruption levels tend to fall.

    16. NK

      Right.

    17. RS

      So corruption's a problem globally, but you have to take it in context of what a country's per capita income is.

    18. NK

      Mm.

    19. RS

      The poorer country, the poorer tend to be the quality of institutions, and the more the corruption tends to be. So if you, so if you go to Indonesia, Nigeria, all countries with roughly similar per capita income to us-

    20. NK

      Yeah

    21. RS

      ... some less, some more.

    22. NK

      Yeah.

    23. RS

      But roughly in the same neighborhood, corruption will be a very big issue. Whereas you go to some of the most richest countries in the world, Switzerland, or you know, like in the Nordic countries, you won't hear much of corruption.

    24. NK

      Mm.

    25. RS

      It's not it's non-existent, but you won't... You'll hardly hear of it. So I think that it's generally about where you stand. As far as India is concerned, given our per capita income, I think that it's not as if we are much more corrupt than-

    26. NK

      It's not so bad, in my opinion.

    27. RS

      Yeah.

    28. NK

      Yeah. I feel like corruption-

    29. RS

      Based on per capita income.

    30. NK

      Yeah.

  14. 1:15:03 – 1:25:37

    UBI & AI’s potential

    1. NK

      this.

    2. RS

      Yeah, that's right.

    3. NK

      Do you think the world is moving in the universal basic income direction, and it is but unavoidable?

    4. RS

      Again, I don't see the evidence that it's moving in a very big direction, just because the deficits is already so large for these countries, you know? So I think that there's been a, uh, that, uh... the, the problem the world faces today is that the government debt load, in particular, in many countries, and especially to do with, uh, deficits, has become so large. And when money was free, when you had zero interest rates-

    5. NK

      Right

    6. RS

      ... then you thought that you could keep running these deficits.

    7. NK

      Right.

    8. RS

      That's no longer the case today.

    9. NK

      Right.

    10. RS

      Interest rates have gone up everywhere, and so it's very difficult. So I don't see people have the money and the means to do it.

    11. NK

      Yeah.

    12. RS

      So, you know, which is the fact that unless you're willing to redirect capital from somewhere to do this, but today, governments don't have the money.

    13. NK

      Some people are making the case that AI increased productivity. Eventually, excess productivity will lead to a deflationary environment, where interest rates will be negative, and countries which have a deficit will deflate their currencies out of deficit in a way.

    14. RS

      Y- you know, we are currently in the mi- in the midst of an AI mania-

    15. NK

      Yeah

    16. RS

      ... where every problem in the world is being solved because of AI.

    17. NK

      What's your view of it?

    18. RS

      I think that it's undoubtedly a hugely transformative technology.

    19. NK

      Mm.

    20. RS

      But I'm very concerned that this got echoes of what we went through in '99 and 2000.

    21. NK

      Mm.

    22. RS

      Uh, every episode's different.

    23. NK

      Mm.

    24. RS

      But the whole idea, we began your show by sort of saying this-

    25. NK

      Mm

    26. RS

      ... that the, uh, definition of a bubble is a good idea gone too far.

    27. NK

      Right.

    28. RS

      So I'm all for the benefits of AI and stuff.

    29. NK

      Yeah.

    30. RS

      But whether this AI is going to come and like, you know, in terms of solve every problem, and the governments can be as profligate as they want, and they can spend as much as they want-

  15. 1:25:37 – 1:32:35

    Interaction with Putin

    1. NK

      Yeah

    2. RS

      ... that in general-

    3. NK

      Tell us something about Putin. I'm very intrigued. Like, I've watched him on TV, the translated version of whatever he's saying-

    4. RS

      Yeah

    5. NK

      ... and, um, it's very hard to read him. What do you think of him as a guy?

    6. RS

      ... So I'd say that this is a very, uh, like, interesting case study for me-

    7. NK

      Mm-hmm.

    8. RS

      -because I first met Putin-

    9. NK

      Mm.

    10. RS

      -in 2003.

    11. NK

      Mm.

    12. RS

      Uh, uh, you know, he, like, he'd come to the US, and he came to New York, and he was very much about meeting foreign investors, courting foreign capital, and he had just come to power, and he was like, "H- I have to make Russia like a European country again." He actually say these words-

    13. NK

      Mm.

    14. RS

      ... right? That, "I have to make Russia like a European country again." He was very much about, uh, the economic reformist. And, you know, we spoke about taxes. One of the very few governments in the world which actually introduced a flat tax was Russia.

    15. NK

      Right.

    16. RS

      Right, they said flat tax. I think it was 13% or something.

    17. NK

      Mm.

    18. RS

      Said flat tax.

    19. NK

      Mm.

    20. RS

      And that m- and he's, he told the oligarchs, "You go do what you want, just stay out of politics, and you do what you want," and stuff, and, like, he was that way. When he c- when he came to power, in fact, he was a reformer in the classical way, right? I mean, it seems like such a, uh, long time ago, which most people forget.

    21. NK

      Right.

    22. RS

      And then as the, the, like, Russian economy started booming-

    23. NK

      Huh.

    24. RS

      -in the 2000s, the Russian economy boomed.

    25. NK

      Right.

    26. RS

      And the, and also the oil price also surged. When he came to power, the oil price was $20 a barrel.

    27. NK

      Mm.

    28. RS

      And then by the end of the decade, oil price was $100 a barrel.

    29. NK

      Mm.

    30. RS

      Now, success starts to really go to his head-

  16. 1:32:35 – 1:41:43

    Journalism, free speech & media ethics

    1. RS

      my wrong obsession, but that's what it is.

    2. NK

      Do you feel like you get into trouble more for what you write or what you say?

    3. RS

      Uh, good question. In today's day and age, that difference has blurred-

    4. NK

      Yeah

    5. RS

      ... so much, right? Because-

    6. NK

      Mm

    7. RS

      ... what you say-

    8. NK

      Mm

    9. RS

      ... can often be written as tweets and can be sort of go viral as well.

    10. NK

      Yeah. Yeah, yeah.

    11. RS

      I think in the, I think in the olden days, the written word was possibly more powerful because it, it had greater staying power.

    12. NK

      Mm.

    13. RS

      Today, because of the internet, the social media, any spoken word also becomes the written word.

    14. NK

      Yeah.

    15. RS

      Uh, so that distinction, I think, has blurred in terms of what is there. But yeah, I think platforms still matter.

    16. NK

      Mm.

    17. RS

      I think that, uh... And there are very few platforms because it's become so democratized.

    18. NK

      Mm.

    19. RS

      Very few platforms which still get you the kind of reach that you once got, uh, in terms of that. No platform does.

    20. NK

      Mm.

    21. RS

      Like, you know, you can be published wherever. The kind of reach that you had in the, uh, you know, like about 20 years ago, if you got publish- if you got published in a particular newspaper-

    22. NK

      Yeah

    23. RS

      ... or stuff, you knew that you were reaching a very large portion of the audience.

    24. NK

      Yeah.

    25. RS

      Today, it's much more fragmented-

    26. NK

      Yeah

    27. RS

      ... anyway, but still-

    28. NK

      Today, today you're reaching a large audience. [laughing]

    29. RS

      Yeah, so that, I mean, in terms of [laughing] that's the great thing about doing this show-

    30. NK

      Yeah

  17. 1:41:43 – 1:43:47

    Short selling: risks & rewards

    1. NK

      Mm

    2. RS

      ... it's AI today.

    3. NK

      Have you made money shorting in life?

    4. RS

      Uh, generally not.

    5. NK

      Yeah, same.

    6. RS

      Yeah. But, you know, like, it's very difficult-

    7. NK

      Yeah

    8. RS

      ... to make money shorting in life.

    9. NK

      Because whatever growth might be 6%, 5%, 4%-

    10. RS

      Yeah

    11. NK

      ... there is growth-

    12. RS

      There's growth

    13. NK

      ... in the world.

    14. RS

      Yeah, that's right.

    15. NK

      Yeah.

    16. RS

      So, I mean, you're, you're, like, completely correct. In fact, I find that the best investing is the more, the more longer-term your horizon, the better the chance of success.

    17. NK

      I agree 100%, and strangely, tax laws across the world seem to be on that side.

    18. RS

      Yeah, that's right. But I think that, you know, like in terms of that, you know, but we are also... We kind of a simplistic view that you just keep buying every dip, and then every dip is going to-

    19. NK

      Yeah

    20. RS

      ... right, but, but you're right.

    21. NK

      Yeah.

    22. RS

      So, that shorting is much more difficult, and just the longer the time horizon you take, the better the chance of your success, as well as any stock or anything that you end up-

    23. NK

      Yeah

    24. RS

      ... uh, that you end up buying.

    25. NK

      So India doesn't have a very robust lending and borrowing mechanism, so you can't really borrow companies to short.

    26. RS

      Yeah.

    27. NK

      Largely, people choose to short through derivative contracts-

    28. RS

      Yes

    29. NK

      ... which have- the liquid contracts have a shelf life of not longer than three months.

    30. RS

      Yes.

  18. 1:43:47 – 1:53:26

    How Ruchir found his passion

    1. NK

      Yeah.

    2. RS

      Yeah.

    3. NK

      Yeah. Okay, I'm gonna get your... Uh, first thing, we didn't complete your story. You spoke about school, and then you traveled, and then you heard- you, you saw a bit of socialistic India, I'm guessing under Indira Gandhi.

    4. RS

      Yeah, that's right. I mean, and you know, like, in terms of as a kid, and then it just carried on, right? I mean, like until the '80s and stuff. And even when we started opening up in the 1990s, we were still w- very behind-

    5. NK

      Yeah

    6. RS

      ... what other countries had done-

    7. NK

      Yeah

    8. RS

      ... uh, by then.

    9. NK

      And then you went under Lee Kuan Yew-

    10. RS

      Yeah

    11. NK

      ... who's like this magnetic well... I've seen some of his speeches.

    12. RS

      Yes.

    13. NK

      ... I've just been interested in the history of Singapore fishing village-

    14. RS

      Yeah

    15. NK

      -to what they are today.

    16. RS

      Yeah.

    17. NK

      Uh, I think his son was in power, now no longer, but it's still not a very partisan, like, there's only one partis- one party even today, right? For all relevant purposes.

    18. RS

      Well, a dominant party. Yeah, you have the opposition-

    19. NK

      Yeah

    20. RS

      ... but, yeah, you have one dominant party there. Yeah.

    21. NK

      Yeah, yeah.

    22. RS

      Yeah.

    23. NK

      So what happened when you left India, went there? Why did you go there, and then what happened?

    24. RS

      So as I said, I went to Singapore because my father was transferred there.

    25. NK

      Yeah.

    26. RS

      He was, like, the defense attache-

    27. NK

      Yeah

    28. RS

      ... in the Indian High Commission. And then I had to come back to India when he came back to India, and then I, uh, I found my passion-

    29. NK

      Mm-hmm

    30. RS

      ... uh, there. You know, which is that, uh, a lot of people ask me, even today [chuckles] the, you know, like, the typical question, which I'm sure you get asked, that: "What's the secret of your success and stuff?"

  19. 1:53:26 – 1:57:28

    Validation & defining happiness

    1. RS

      the two big things that kept me going.

    2. NK

      Can I ask you a question? Does validation for Ruchir Sharma today come from intellectual, academic superiority, the money you have made, or social influence?

    3. RS

      You know, I'd say I truly believe in the life of living life in parallel, because in each field-

    4. NK

      Mm

    5. RS

      ... I know people who have done much better than I've done.

    6. NK

      Mm.

    7. RS

      Right? The, and, yeah.

    8. NK

      Let me ask, ask you in another way. Let me rephrase. If you could ditch either the intellectual superiority perception in society, the money you have, or the social influence that as many people read your book as they do and watch you when you speak, which one would you ditch?

    9. RS

      It's like asking you which of your three children do you like the most?

    10. NK

      No.

    11. RS

      It really is, because for me, as I said, it's so been about li-

    12. NK

      I'll give you an answer if you ask me that question.

    13. RS

      That, uh, in terms of, uh-

    14. NK

      If I had two, three traits that define me in society-

    15. RS

      Yeah

    16. NK

      ... which one I would ditch, I would pick right away.

    17. RS

      Uh, I'd love to know which one.

    18. NK

      I would pick the social influence, people listening-

    19. RS

      To ditch?

    20. NK

      Yeah.

    21. RS

      Yeah, so in terms of picking order-

    22. NK

      Yeah

    23. RS

      ... I think it's very clear-

    24. NK

      Yeah

    25. RS

      ... that the most empowering thing is to, i- is to, is to have money.

    26. NK

      Yeah.

    27. RS

      So I agree with that.

    28. NK

      Yeah.

    29. RS

      So most empowering is money.

    30. NK

      Yeah.

  20. 1:57:28 – 2:06:44

    FDI & how India can boost growth

    1. RS

      it.

    2. NK

      Okay, so we're gonna, we're gonna run through some trends-

    3. RS

      Mm, mm.

    4. NK

      ... and see what can we do to improve the India number. It's gonna be a little bit more India-focused and less world-focused.

    5. RS

      Sure. Mm.

    6. NK

      Starting with FDI money coming into the country. FDI in the last few years seems to have slowed down significantly.

    7. RS

      Mm.

    8. NK

      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, where each country looks inward more than it does outward, like a more glob- globalized world was looking outwards 5 or 10 years ago? What do you think will happen with FDI?

    9. RS

      No, I think that as far as FDI is concerned, undoubtedly, India's rate has been a bit disappointing, right?

    10. NK

      Mm.

    11. RS

      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 3 to 4% of GDP.

    12. NK

      Mm.

    13. RS

      We have never really broken much above 1% of GDP, the net FDI number at least, and that's because as I said, I, like, earlier, that it's just a difficult country for a p- a foreign investor to come and do business from the start.

    14. NK

      Mm.

    15. RS

      That you're mo- almost happier doing portfolio or other investment, where you're piggybacking already on the existing local person-

    16. NK

      Mm

    17. RS

      ... uh, who knows how to navigate this environment.

    18. NK

      Mm.

    19. RS

      But to directly set shop here-

    20. NK

      Mm

    21. RS

      ... is still very difficult. Therefore, our FDI number has barely broken above 1% of GDP, ever.

    22. NK

      So I was part of Gift-

    23. RS

      Mm-hmm

    24. NK

      ... when it started.

    25. RS

      Mm.

    26. NK

      I'm still on their board, and-

    27. RS

      Yeah

    28. NK

      ... I work with those guys a lot. I love those guys, by the way. Whenever I talk to funds outside, they seem to think that it's easy to invest in India, it's harder to take out money from India.

    29. RS

      Yes.

    30. NK

      And that narrative has not gone away. And the many debates we have had over the years have been things like, for a while they said, "Why do we require a PAN in India if you're a foreign investor?" I think Gift changed that ruling around, and they said, "No PAN is required." They've been acting on all the feedback they've received. Why do foreign funds, FDIs and FBIs, still believe that it is hard to take out money from the country? And if we were to become capital account convertible, would that mean net inflow or net outflow from India as it stands today in the world?

  21. 2:06:44 – 2:11:31

    US: Superpower no more?

    1. RS

      AI front, absolutely.

    2. NK

      Yeah.

    3. RS

      Yeah.

    4. NK

      Would you bet US now, if you were to be given a choice? If you had one binary dollar to either buy the S&P or the Nasdaq or not buy, buy or short?

    5. RS

      No, my view is very clear just now, that the, that over the next 10, five, 10 years, I think the rest of the world outperforms the US.

    6. NK

      Right.

    7. RS

      So US has had this incredible outperformance.

    8. NK

      Mm.

    9. RS

      So you know, we've gone through these phases.

    10. NK

      Mm.

    11. RS

      We've got history here going back right up till the beginning of the 20th century, covering more than 10 decades. And what you find is that it tends to often alternate.

    12. NK

      Mm.

    13. RS

      One decade the US will do very well, the other decade, the rest of the world will do very well.

    14. NK

      Mm.

    15. RS

      Uh, and till, right up until the global financial crisis in 2009-

    16. NK

      Mm

    17. RS

      ... the returns in the US and the rest of the world were roughly even, in dollar terms. I'm talking about everything in dollar terms.

    18. NK

      Mm.

    19. RS

      Last 10 to 15 years, the US returns have just been three times faster-

    20. NK

      Yeah

    21. RS

      ... than, than the rest of the world. It's just left the rest of the world, like, in the dust. But a lot of that also had to do with the fact that the dollar was very strong.

    22. NK

      Mm.

    23. RS

      The US economy did very well already because of technology, and the rest of the world seemed to lose its plot after the heydays of the 2000s. The BRICS and everything sort of, you know, got complacent, took up too much debt, and then places like Europe, Japan, facing demographic issues, regulatory issues, and stuff. I feel that's changing now, that the rest of the world is getting its act back together a bit. Partly what Trump's tariffs are doing, is it's galvanizing the rest of the world to do more domestic reform, to, you know, like, get more capital to compensate for any da- uh, damage from tariff. And the US has now become very overvalued compared to the rest of the world, including the dollar. So now we're beginning to s- So I think that, that in the next five to ten years, I think the rest of the world outperforms the US. In fact, today I'd say that the only reason for being in the US today is AI-

    24. NK

      Mm

    25. RS

      ... uh, from an investment perspective. Uh, you know, so someone asked me in, uh, like I was there talking to a large sovereign wealth fund, that, "How should we asset allocate? I've got $100, how do I asset?" So I said, "It's quite... It's, it's probably simpler than it's been in the past."

    26. NK

      Right.

    27. RS

      ... that if you want, that if you wanna be in the US, do it only for AI. Everything else in the US today doesn't l- is, is, is either expensive or fundamentally flawed.

    28. NK

      Mm.

    29. RS

      So you don't have to be there. And for anything outside of AI, you be in the rest of the world. Now, how much to allocate between US and the rest of the world depends on what's your view on AI. If you're a super bullish AI, and you believe the projection these companies are giving, then you please put 70 to 80% of the capital in the US.

    30. NK

      Mm.

  22. 2:11:31 – 2:18:28

    Geopolitics: India, China & US

    1. RS

      dried up.

    2. NK

      Do you think the Chinese and the Americans have this unsaid relationship where, "We will allow you to have a trade surplus as long as you in turn buy our treasury," and then money net-net is not going back to China? In a way, it's staying in America. Do you think that's been a relationship of sorts?

    3. RS

      It may have been in the past, but it's declined. Because if you look at the Chinese hold-

    4. NK

      They're not buying treasury.

    5. RS

      Yeah, exactly. I mean, the Chinese hold of, like, uh-

    6. NK

      Mm

    7. RS

      ... uh, treasuries-

    8. NK

      Yeah

    9. RS

      ... that's gone down.

    10. NK

      Almost coinciding with the tariff narratives.

    11. RS

      Uh, no, even before that.

    12. NK

      Slightly, one, two years.

    13. RS

      Uh, like, I'd say the big turning point was Ukraine.

    14. NK

      Right.

    15. RS

      That... The, you know, the moment that that happened-

    16. NK

      Mm.

    17. RS

      I think that was a very big turning point. Even before that, maybe it started because US/China relations had been deteriorating for a while.

    18. NK

      Yeah.

    19. RS

      But Ukraine was a very big turning point. There were the, uh... And what I referred to is that the, the way the sanctions were imposed on, on Russia at the time of the Ukrainian War, where the assets were seized-

    20. NK

      Yeah

    21. RS

      ... and Russia was thrown off the dollar grid-

    22. NK

      Yeah

    23. RS

      ... completely. I think that was a big wake-up call-

    24. NK

      Yeah

    25. RS

      ... for governments around the world that, "Listen, this, if, i- if this can happen to Russia, it can happen to us." Even though Russia m- may have acted outlandishly in the way, l- like, what it did, did in Ukraine, but the fear felt... You know how it is-

    26. NK

      Yeah

    27. RS

      ... when you, you feel as, that if someone, you know, like, uh, uh-

    28. NK

      Yeah

    29. RS

      ... gets targeted, even if for the right reason-

    30. NK

      Yeah

  23. 2:18:28 – 2:21:55

    American tech & patriotism

    1. RS

      as yet.

    2. NK

      The one thing America does a stellar job at is selling patriotism. I don't know how they do it, but to see a flag outside every other house, to talk about this American dream and all of that, you see it... It's like it's permeated all parts of society. I think India is on that path-

    3. RS

      Mm-hmm

    4. NK

      ... where everybody's getting more patriotic. Like, I'm a big champion of buy Indian brands only. Like, I'll buy shirts from 11:11. I'll buy my chappals from some brand here. I feel like we're on that journey. I don't know when that line is crossed, but I feel like that's the, that's the time when this- when they have something to lose and bargaining becomes more fair.

    5. RS

      Well, that's what's happening with China today.

    6. NK

      Yeah.

    7. RS

      Right? I mean-

    8. NK

      Yeah

    9. RS

      ... so in terms of the fact that because China sort of has the, uh, rare earths and stuff. But having said that-

    10. NK

      Yeah

    11. RS

      ... um, the only slight pushback I'll give on this American point-

    12. NK

      Yeah

    13. RS

      ... is that at the end of the day, the consumer there is also quite transactional.

    14. NK

      Mm.

    15. RS

      Because after all, they were not able to get rid of TikTok, right? Because, I mean, they kept threatening or whatever, but the- it's so popular among the young in America. There were the reasons they were not able to, uh-

    16. NK

      Yeah

    17. RS

      ... you know, fully get rid of it, was partly that as well.

    18. NK

      But they said they will Americanize it and-

    19. RS

      Yeah

    20. NK

      ... get somebody to buy the equity.

    21. RS

      I mean, they, they're doing that.

    22. NK

      Yeah.

    23. RS

      But otherwise, like the way we could shut it down, they couldn't do it there.

    24. NK

      But I would also argue that if were TikTok to be shut down, people would just switch to Instagram instantly.

    25. RS

      Could be, but, uh, I'll be surprised, because as I said, something prevented the American government from doing it.

    26. NK

      Maybe not to instigate part two Russia's actions?

    27. RS

      Uh...

    28. NK

      'Cause it would become harder for foreign companies to then invest and build in America, right?

    29. RS

      Yeah. No, I don't think that was a consideration from what I gather-

    30. NK

      Mm

  24. 2:21:55 – 2:30:56

    Small cap boom & retail investors

    1. NK

      try.

    2. RS

      Yeah.

    3. NK

      So for the FDI winter, capital controls become... capital account convertibility comes through, experience with regulator improves, notices being served go away. You have somebody to interact with, where everything gets faster.

    4. RS

      Yeah.

    5. NK

      You will get more money from your X company and your current company, Rockefeller and Morgan Stanley.

    6. RS

      Yeah. I'd say that, and, uh, I, I mean, me, in terms of raising my own money, my own fund and stuff like that-

    7. NK

      Yeah

    8. RS

      ... I'd say that absolutely, that will become e- uh... Like, I want India to get more capital.

    9. NK

      Yeah.

    10. RS

      Right? Because the, my heart still lies here.

    11. NK

      Yeah.

    12. RS

      This is where I want the thing to prosper.

    13. NK

      Yeah.

    14. RS

      But, uh, I just want to sort of, you know, see this stuff happen in a easier way. But I- and also they said the responsibility also has to be down with the chief ministers as well.

    15. NK

      Yeah.

    16. RS

      Especially for FDI.

    17. NK

      Yeah.

    18. RS

      Yeah. Maybe not for FII, but FDI.

    19. NK

      Why not for FII?

    20. RS

      Well, for FII, I think the regulatory environment is much more at the center.

    21. NK

      The categorization you would make is one is capital market and one is private market?

    22. RS

      Yeah. Uh, in terms of-

    23. NK

      One is public, public, and one is private?

    24. RS

      No, uh, I'd say that the one is in terms of is more, is more funding other... FDI is more direct, greenfield-

    25. NK

      Mm

    26. RS

      ... where you're on the ground.

    27. NK

      Mm.

    28. RS

      Uh, whereas the other one's more capital flow, right?

    29. NK

      Right.

    30. RS

      Which is that it, it's going to somebody else, but it's being routed through us.

Episode duration: 2:59:43

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