Nikhil KamathThe World Bank President On Why Jobs Fix Everything | Ajay Banga x Nikhil Kamath | People by WTF
EVERY SPOKEN WORD
75 min read · 15,186 words- 0:00 – 2:26
Introduction
- SPSpeaker
[upbeat music]
- NKNikhil Kamath
Is it battery?
- ABAjay Banga
One, two.
- NKNikhil Kamath
I need small.
- SPSpeaker
[upbeat music]
- ABAjay Banga
We want to be on the right side.
- NKNikhil Kamath
Yeah, let me see.
- ABAjay Banga
So when the operation-
- SPSpeaker
[upbeat music]
- NKNikhil Kamath
I-
- ABAjay Banga
Slightly damp hand.
- NKNikhil Kamath
How are you?
- ABAjay Banga
Sorry about that.
- NKNikhil Kamath
No, no. Lovely.
- ABAjay Banga
I love coffee.
- NKNikhil Kamath
Black coffee?
- ABAjay Banga
Very well.
- NKNikhil Kamath
No, I need white. [laughs]
- ABAjay Banga
[laughs]
- NKNikhil Kamath
Should we start? Yeah.
- SPSpeaker
[upbeat music]
- NKNikhil Kamath
If I have to look at the world, which is suddenly in a very tumultuous place, everybody seems to be fighting with everyone. What happens now to world trade? What happens to currency? What happens if interest rates remain low?
- ABAjay Banga
Mm-hmm.
- NKNikhil Kamath
So income inequality is going to continue to go up. So where do you see the world going? I know it's a broad question.
- ABAjay Banga
So I'm a little less despondent than you are, clearly.
- NKNikhil Kamath
[laughs]
- ABAjay Banga
And for someone so young, I got to get you off this, right?
- SPSpeaker
[upbeat music]
- ABAjay Banga
The idea of being flexible, adaptable, and capable of moving quickly into a plan B and a plan C, it's a very useful asset in a career. You have to be willing to be humble enough to recognize that you don't control everything. But what you do control, you better do something about. The number of tourists you get into India in a year is under 20 million.
- NKNikhil Kamath
Yeah, which is crazy, right?
- 2:26 – 9:00
AJ's career journey across industries
- NKNikhil Kamath
you, Ajay, for-
- ABAjay Banga
Yeah
- NKNikhil Kamath
... taking the time to do this.
- ABAjay Banga
Pleasure to be here.
- NKNikhil Kamath
I think we've been planning to catch up for a while now, but we've always missed each other by a-
- ABAjay Banga
Yes
- NKNikhil Kamath
... short margin.
- ABAjay Banga
Yeah.
- NKNikhil Kamath
I know you're a very busy man. Uh, maybe we can start today by giving our audience... Our audience is largely Indian origin, trying to be entrepreneur, uh, the young person under the age of 30, around 25, I would say, on average.
- ABAjay Banga
Just like you. [laughs]
- NKNikhil Kamath
Uh, yeah. [laughs] I wish I was that young. Not anymore, unfortunately. But they all want to figure out what to build, how to start something.
- ABAjay Banga
Yeah.
- NKNikhil Kamath
Like you were telling me about your daughters.
- ABAjay Banga
Yeah.
- NKNikhil Kamath
A lot of them have a job right now. They want to transition into owning a business. Uh, there is a lot of uncertainty about AI and which job will remain, which will not. You speak a lot about jobs. So maybe we start with you, and you tell us a bit about your career. I mean, I know a lot about you, but for the few people in our audience who might not, could you start by giving us a couple of minutes on your life, how it began, context.
- ABAjay Banga
Sure.
- NKNikhil Kamath
Yeah.
- ABAjay Banga
Sure, sure. So I'm 66, so it began a long time ago- [laughs]
- NKNikhil Kamath
[laughs]
- ABAjay Banga
... compared to the audience you're talking to.
- NKNikhil Kamath
Right.
- ABAjay Banga
But, uh, my dad was in the army, and we kind of moved every two, three years and, you know, to... what you would call an army brat in that sense.
- NKNikhil Kamath
Mm-hmm.
- ABAjay Banga
Living a relatively sheltered upbringing because of that surrounding of being in a cantonment with the people who came from a similar background of some type. And then there was an elder sister, she's the eldest, an older brother who's five years older than me, so ten-five-zero, kind of three of us. And-
- NKNikhil Kamath
Which city was this?
- ABAjay Banga
I'm sorry?
- NKNikhil Kamath
Which part of India?
- ABAjay Banga
Oh, all over the place. I was born in Pune.
- NKNikhil Kamath
Uh.
- ABAjay Banga
And my sister and brother were born, you know, 10 years and 5 years earlier. My brother was born in Simla. My sister was born in Delhi. And so they've kind of been all over the place. And then we moved every couple of years. So I started schooling in, you know, my early days in Jhansi-
- 9:00 – 15:00
Consumption patterns and consumer insecurity
- ABAjay Banga
there is a change in consumption patterns as incomes increase beyond a point, but till you get to that point, and India is still on that journey, till you get to that point, you'll get pretty good expansion of, of consumption. The nature of things consumed may change. The perceived, uh, advantages of a luxury good may change. The willingness to pay more for quality and pricing may change, which you've already seen in India in the last twenty years. That I think could keep happening, but I don't think consumption won't keep growing for a while. The one thing that could impact consumption is insecurity. So if you create, you know, if people get insecure about jobs or insecure about savings or insecure about their future, then that leads to a inward turn on consumption. That's got nothing to do with prosperity and growth. It's got to do with, you know, the topic you started with about how do you feel about your future. So long as you're optimistic, you tend to be willing to spend.
- NKNikhil Kamath
When you're no longer optimistic, does the nature of consumption change, or do you stop consuming?
- ABAjay Banga
A little bit of both. You might downtrade in prices. You might downtrade in some things. You may leave certain things that you feel were luxuries that you don't need to consume. And I'll give you a crazy example, but here in New York City, uh, the day the stock market does well, if you go to the average upmarket restaurant here, you will find the price of wine purchased that day at dinner goes up. It's the same day.
- NKNikhil Kamath
Really?
- ABAjay Banga
And now if it goes down, you will find it has an impact. It's how people feel. Consumption is not just about your material need. That is true when you're at a lower income level. But at a higher income level, consumption is also about how you feel in your head, and that's very different.
- NKNikhil Kamath
So in times of uncertainty like today, by virtue of what's happening in geopolitics and stock markets having corrected, if I were to correlate that, not just in America in wine prices, [laughs] do you think-
- ABAjay Banga
[laughs] I gave you that to show you how crazy it can be
- NKNikhil Kamath
... yeah. Do you think in India, for example, the real estate market will follow the stock market? Will purchase of high-end cars go down?
- ABAjay Banga
Yeah. No, I don't think so. I think that India is still at a stage where the optimism of its population in terms of the future of India, in terms of its growth potential, and therefore their belief that they will have a better life than their parents. I still think India is going through that, that growth phase. And so you may have ups and downs. You may have, you know, I cannot predict either stock or real estate prices anywhere. I, I gave up that long back. If I could do that, I would be-
- NKNikhil Kamath
Right
- ABAjay Banga
... doing something completely different.
- NKNikhil Kamath
Right.
- ABAjay Banga
But, but I think you can't predict short-term changes or even medium-term. But if you look at the trajectory, you-- I don't think India has reached that point yet where its trajectory needs to be doubted in that sense. And if you look at the way India is building infrastructure, right? Whether it's bridges, roads, airports, fixing up its port system, power, water systems and so on. It's not that there isn't work to do, and it's not that there isn't more work to do, but it is very different from twenty-five years ago, twenty years agoAnd without infrastructure, without, uh, healthcare, education, and skilling, you can't create the first foundational pillar of prosperity. Then you need the right governance and policies and rules and laws and regulations and transparency and all that, and then you need the financing for the private sector, you know, small, new entrepreneurs all the way to large companies. And then you need-- That's the process by which prosperity comes, and I think India is still doing pretty well on that trajectory.
- NKNikhil Kamath
So coming to what is the World Bank, Ajay, I, I'm a little bit of a fan of history. When I was younger, I spent a lot of time on the-
- ABAjay Banga
Yeah
- NKNikhil Kamath
... on the Second World War and German history.
- ABAjay Banga
Mm-hmm.
- NKNikhil Kamath
Uh, if one were to say that the World Bank was created post-World War II because rich, developed countries arrived at the conclusion that instability is generally a symptom of things not working well in economics, and giving money to poorer country makes the world more stable, which in turn prevents war. Would you say that's why the World Bank, in a way, was created?
- ABAjay Banga
So the original creation was the International Bank of Reconstruction and Development.
- NKNikhil Kamath
Mm-hmm.
- ABAjay Banga
IBRD.
- NKNikhil Kamath
Right.
- ABAjay Banga
And that's the Bretton Woods thing you hear about.
- NKNikhil Kamath
Mm.
- ABAjay Banga
That actually got created to help rebuild Europe and Japan-
- NKNikhil Kamath
Mm-hmm
- ABAjay Banga
... after the Second World War.
- NKNikhil Kamath
Mm-hmm.
- ABAjay Banga
And so it was a way to not really-- They weren't really thinking about the developing world at that time, because remember at that time, these areas of Europe and Japan had been decimated-
- NKNikhil Kamath
Right
- 15:00 – 22:00
World Bank's five-part structure explained
- ABAjay Banga
a bank or from markets in your country. The third thing that got created was the International Finance Corporation. That goes to the private sector.
- NKNikhil Kamath
Mm-hmm.
- ABAjay Banga
And enables the private sector to invest by de-risking in emerging market stuff. India is a classic example of that. Most people don't know, but HDFC originally started-
- NKNikhil Kamath
Right
- ABAjay Banga
... with an IFC investment.
- NKNikhil Kamath
Right.
- ABAjay Banga
And today is your largest private bank and has got an enormous footprint both in mortgages and helped to create the mortgage market in some ways in, in India, but also did a great job on the private banking side of, of financial services. And then the fourth part that got created was MIGA, the Multilateral Insurance Guarantee Agency.
- NKNikhil Kamath
Mm-hmm.
- ABAjay Banga
And the idea there is to provide political risk insurance to a company or an entrepreneur, that even if a government makes you a commitment and they don't live by it, could you go for an arbitration-
- NKNikhil Kamath
Mm-hmm
- ABAjay Banga
... and get settlement? So we do, you know, we do both, uh, insurance guarantees through MIGA and then the arbitration through ICSID, which is our settlement of investor disputes on the fifth part, which settles between sovereigns and investors. So think about the bank as having five parts, and only the first part started soon after the Second World War.
- NKNikhil Kamath
Right.
- ABAjay Banga
Then came these add-ons over time. And today, when you step back and look at the totality, it's a hundred and twenty odd billion dollars that gets put into the marketplace every year. There's about twenty-five, thirty thousand people working across the world on this. And it runs the full gamut from the poorest countries getting one third of money as grants, all the way to the middle income countries like IBRD, like India. India was an IDA country once upon a time, and now is a donor to IDA.
- NKNikhil Kamath
Right.
- ABAjay Banga
Türkiye, China, South Korea, were all IDA countries, now donors. IBRD is still what India does get, but India is pivoting more and more towards the private sector with IFC and MIGA. And so you can see the evolution of growth in countries through the manner in which the bank deals with them. It's quite interesting.
- NKNikhil Kamath
So if I were to say the biggest chunk of the money flowing through World Bank, does it go to IFC? I have some numbers saying seventy billion to IFC, forty billion-
- ABAjay Banga
Yeah
- NKNikhil Kamath
... to IDA and-
- ABAjay Banga
No. So the way it goes every year, because that you're counting private sector capital as-
- NKNikhil Kamath
Mm
- ABAjay Banga
... mobilization. If you look at the hundred twenty I talked about-
- NKNikhil Kamath
Mm
- ABAjay Banga
... about thirty-five to forty comes from IBRD.
- NKNikhil Kamath
Okay.
- ABAjay Banga
About thirty-five comes from IDA. Now, it depends on the year, right?
- NKNikhil Kamath
Mm-hmm.
- ABAjay Banga
So let's say seventy to eighty is coming from the public sector part-
- NKNikhil Kamath
Mm-hmm
- ABAjay Banga
... of the institution. About thirty comes from, twenty-five to thirty comes from IFC. MIGA has fifteen odd billion that it mobilizes. That's your one twenty. But if you also add private capital mobilization, like last year, we mobilized seventy billion almost of private capital.
- NKNikhil Kamath
Mm-hmm.
- 22:00 – 29:00
Killing poverty through job creation
- ABAjay Banga
funds and asset managers.
- NKNikhil Kamath
Mm-hmm.
- ABAjay Banga
But 40% could be central banks parking reserves into bonds and the like as well.
- NKNikhil Kamath
And what is the point of the World Bank, Ajay, if you have to simplify to somebody who has no context?
- ABAjay Banga
Make jobs for young people, create jobs, help to do that. It's very simple. It's to kill poverty.
- NKNikhil Kamath
Right.
- ABAjay Banga
Right? That's the idea. Get rid of poverty.
- NKNikhil Kamath
Mm-hmm.
- ABAjay Banga
The best way to get rid of poverty, uh, the best way to put a nail in the coffin of poverty is to give somebody a job.
- NKNikhil Kamath
Mm.
- ABAjay Banga
Because then you get not only the earnings that allow them to subsist and have a family and care for them, but you get them hope and optimism. You will hear me talk about hope and optimism-
- NKNikhil Kamath
Yeah
- ABAjay Banga
... as a very important driver of human behavior, and, uh, a job gives you that. And the moment you ... A job doesn't mean working for somebody.
- NKNikhil Kamath
Mm-hmm.
- ABAjay Banga
It could also be being an entrepreneur. It could be a small farmer, it could be a large entrepreneur, it could be someone with a successful business like yours, or it could be somebody who's working like me for somebody else. It doesn't matter. The idea of having earnings is what I'm talking about.
- NKNikhil Kamath
When I think about poverty and income inequality, it almost appears to me like the world does have enough. The distribution of what the world already has is not equal, and hence there is poverty and there is excess on the other side. Do you think that's right?
- ABAjay Banga
Yeah, I don't think like that, because I think you're looking at a new utopian system where-
- NKNikhil Kamath
Mm
- ABAjay Banga
... somehow you could wave a magic wand and, uh, take from Peter to feed Paul, and I'd be a little careful about that thinking.
- NKNikhil Kamath
Right.
- ABAjay Banga
That's not the way I believe. I believe that what creates wealth, first of all, is entrepreneurship and the private sector. I believe government's role is to create the infrastructure and the ability and the human capital and the rules and governance that enable the private sector to create jobs. I mean, 85 to 90% of jobs in the world are created in some form or the other in the private sector or in private sector oriented enterprises in the state-owned sector.
- NKNikhil Kamath
Right.
- ABAjay Banga
That's kind of how this happens.
- NKNikhil Kamath
Mm.
- ABAjay Banga
And most of those are created with medium and small and micro enterprises. And so that cycle, that virtuous cycle of enabling these people to succeed so all of us can also be that way-
- NKNikhil Kamath
Mm-hmm
- ABAjay Banga
... I think that's an important thing to remember. So I don't believe that the way to think about this is if you can redistribute all the wealth, it'll be fine.
- NKNikhil Kamath
Right.
- ABAjay Banga
I just think you need to find a way to not lower the water in the river-But to actually raise the water in the river-
- NKNikhil Kamath
Right
- 29:00 – 35:00
Primary healthcare and farmer empowerment
- ABAjay Banga
of it, and between simple AI and the doctor, you can conclude whether it's an eczema-
- NKNikhil Kamath
Mm-hmm
- ABAjay Banga
... give me an ointment and send me home-
- NKNikhil Kamath
Mm-hmm
- ABAjay Banga
... or give me an appointment at a regional hospital-
- NKNikhil Kamath
Right
- ABAjay Banga
... because there's something about it that doesn't look good.
- NKNikhil Kamath
Right.
- ABAjay Banga
Things like that. Or a farmer who can use this to be able to think about, which I'm doing in the case of agriculture for small farmers-
- NKNikhil Kamath
Mm-hmm
- ABAjay Banga
... giving them tools. In UP, in fact, if you, if you Google what I was doing back with-
- NKNikhil Kamath
Mm-hmm
- ABAjay Banga
... with in UP last year, this is what I was doing. Going to farmers who have set up cooperatives, and technology can be used with a Google open platform-
- NKNikhil Kamath
Mm-hmm
- ABAjay Banga
... where you can, um, use that technology to tell an illiterate farmer what that disease is at the back of a leaf. Forget the name, but what insecticide do you need-
- NKNikhil Kamath
Mm-hmm
- ABAjay Banga
... that's available for 25 rupees with your cooperative? So what I'm trying to get at is, our, our money in that question doesn't actually go to the top of the pyramid. We don't do much financing of large companies.
- NKNikhil Kamath
Right.
- ABAjay Banga
We're much more focused on getting the public sector to set up the right infrastructure-
- NKNikhil Kamath
Right
- ABAjay Banga
... and the right human and physical infrastructure.
- NKNikhil Kamath
Mm-hmm.
- ABAjay Banga
And then we're very focused, and I think a large part of our bank, which we haven't yet talked about, is what I call the knowledge bank.
- NKNikhil Kamath
Mm-hmm.
- ABAjay Banga
So we are, we talked money.
- NKNikhil Kamath
Right.
- ABAjay Banga
We're a money bank.
- NKNikhil Kamath
Right.
- ABAjay Banga
A Santa Claus in some cases.
- NKNikhil Kamath
Yeah.
- 35:00 – 42:00
Wealth concentration versus societal prosperity spread
- NKNikhil Kamath
up at the king's door with access-
- ABAjay Banga
Right, right
- NKNikhil Kamath
... to take over.
- ABAjay Banga
Right, right.
- NKNikhil Kamath
So where do you see the world going? I know it's a broad question.
- ABAjay Banga
So I'm a little less despondent than you are, really.
- NKNikhil Kamath
[laughs]
- ABAjay Banga
And for someone so young, I gotta get you off this, right? Uh, the, um, the first thing I would say is that remember trade, when you said 10% America is of trade, you're counting trade the way it's counted with goods and s- you know, of a certain type.
- NKNikhil Kamath
Yeah.
- ABAjay Banga
You gotta remember, services trade isn't properly valued.
- NKNikhil Kamath
I agree. If you were to value it, I would say there would be 25%-
- ABAjay Banga
Yeah
- NKNikhil Kamath
... of world GDP.
- ABAjay Banga
And that's roughly their current share of GDP as well.
- NKNikhil Kamath
Yeah.
- ABAjay Banga
Actually, interestingly, the European Union is very similar in size.
- NKNikhil Kamath
Mm-hmm.
- ABAjay Banga
24, 25% of GDP as well. And when you take those two, that gives you half the world's consumption and GDP in some form or the other. The, um, the point about concentration of wealth, I think if it's one person who collects the wealth, it's very different. But if what you mean by inequality is only one person, that's a problem. But if it's a very large entrepreneurial class or a bunch of people who have done very well. If you look at America, yes, there is concentration of wealth in the last 10 years between ... You know, if you look at the .2% of Americans who have even more money than they did, it's correct. But look at the number of millionaires that have expanded in this country. And so actually, in a strange way, the diversification of that concentration is also something to be kept in mind.
- NKNikhil Kamath
Wouldn't you say the top 1%-
- ABAjay Banga
Similar in India, by the way
- NKNikhil Kamath
... has more?
- ABAjay Banga
It is. The top X percent does have more, but the number of millionaires being created-
- NKNikhil Kamath
Mm
- ABAjay Banga
... is very different. The same is true of India.Where, yes, I would argue that five, seven, eight, ten families have even more wealth than they used to, including new, newly created wealthy families because of the boom in entrepreneurship that has taken place over the last twenty years in India. But there is also a very large collection of wealthier people across. And so, you know, concentration, the point you were making is, if it's one, two, three, four people, yes. The moment it becomes hundreds and thousands of people who not only some of whom become incredibly rich, but others of whom become rich enough to be able to afford a much better life, I don't think you run the same risk as what history would tell you was the king controlling ninety-nine and the people having one.
- NKNikhil Kamath
Right.
- ABAjay Banga
You see what I mean?
- NKNikhil Kamath
Yeah.
- ABAjay Banga
Now it is that a bunch of very rich people have thirty.
- NKNikhil Kamath
Mm.
- ABAjay Banga
A bunch of less rich people have thirty.
- 42:00 – 49:00
Demographic dividend becoming freight train
- NKNikhil Kamath
you're forecasting, one can witness already, and I think a lot of the revolutions in different of these, some of these countries could be a by-product of that.
- ABAjay Banga
Yeah.
- NKNikhil Kamath
Now, would you also say the demographic dividend that we all spoke about for so long, if a country has a big-
- ABAjay Banga
Mm-hmm
- NKNikhil Kamath
... young population-
- ABAjay Banga
Mm-hmm
- NKNikhil Kamath
... it goes from being a boon to a bane, wherein if they don't have jobs, the same thing is a problem like we thought it was a privilege?
- ABAjay Banga
Yeah, I think it-- at the end of the day, you know, you used the word boon and bane, which is very smart. I use the, the words that this could be, instead of being a light at the end of the tunnel, it could be a freight train coming your way.And I think the purpose I say that is the light at the end of the tunnel is the optimism and the opportunity, and by the way, everybody benefits.
- NKNikhil Kamath
Right.
- ABAjay Banga
Companies will benefit, their technology will be used, their products will be bought, their IP will be utilized, you know, everybody will have a-
- NKNikhil Kamath
Mm-hmm
- ABAjay Banga
... opportunity. On the other hand, if you don't, then you create this insecurity matrix that we started discussing with, and I think that's a real issue. You have to worry about this. Unless, you know, there's those who say that if you could create a universal basic income, somehow you would solve for this.
- NKNikhil Kamath
Mm-hmm.
- ABAjay Banga
I don't think this is about income alone.
- NKNikhil Kamath
Mm.
- ABAjay Banga
I think this is about productive use of your mind and feeling that you're a part of society in a constructive way. It's not just about money.
- NKNikhil Kamath
Right.
- ABAjay Banga
Of course it's about money. If you're starving, it's really about money.
- NKNikhil Kamath
Mm.
- ABAjay Banga
But it's beyond that, and it's about using your mind to do things as well. And I'm... You know, I, I believe this to be a real issue which we need to take on. How do you create jobs in an economy? And I told you about the pillars of infrastructure, both physical and human capital, and then the right rules and governance, and then the right availability of private capital. The sectors we are focused on don't rely on that, and what are those? First is infrastructure itself.
- NKNikhil Kamath
Mm.
- ABAjay Banga
It's construction, but then what it enables, bridges, roads, airports, digitization, all that kind of stuff, right? Second is the idea of working with small holder farmers-
- NKNikhil Kamath
Mm-hmm
- ABAjay Banga
... and enabling them to remain productive and remain on their farms.
- NKNikhil Kamath
Mm-hmm.
- ABAjay Banga
And then create jobs therefore not only by avoiding their job destruction, but upstream and downstream of that you create the job impact of a good agri business ecosystem. That's the second part. And I gave you the example of Amul. Why was that? I worked at Nestle.
- NKNikhil Kamath
Right.
- ABAjay Banga
I admired Amul even then.
- NKNikhil Kamath
Right.
- ABAjay Banga
Amul is... I've talked about this very openly. It is one of the most interesting ways of getting small farmers to access large scale through a cooperative that has enabled them to win where they otherwise would've lost, and therefore kept them in their land and their property working there, as compared to selling it, becoming rich for a short while, running out of that money and becoming urban poor in a shanty town outside of Delhi and Chandigarh. Right? That's not what you want. So the third is primary healthcare. I was in Egypt the other day. You don't build a pyramid from the tip.
- 49:00 – 56:00
Five sectors driving future jobs
- ABAjay Banga
And I would say not just those five, but also for entrepreneurs, for young people, that you ought to add that.
- NKNikhil Kamath
Through risk capital?
- ABAjay Banga
And, and do it, yes. And do it through three things.
- NKNikhil Kamath
Mm.
- ABAjay Banga
Build your own infrastructure, both physical and human capital.
- NKNikhil Kamath
Mm.
- ABAjay Banga
If you don't get education, skilling, and healthcare right-
- NKNikhil Kamath
Mm
- ABAjay Banga
... you can build all the bridges and roads you want. You won't have the people to manage this growth.
- NKNikhil Kamath
Right.
- ABAjay Banga
The second part is get your governance right, which everything from land law, labor law, bankruptcy law-
- NKNikhil Kamath
Right
- ABAjay Banga
... digitization, anti-corruption. A lot of things you are doing today.
- NKNikhil Kamath
Right.
- ABAjay Banga
They need to keep happening-
- NKNikhil Kamath
Right
- ABAjay Banga
... at pace, right? And then the third part is risk capital for small and medium enterprises, for women, for larger capital as well, for companies to grow. Very often companies grow into medium size and then don't know how to break through because they don't get access to capital. So you've got to create that ladder of capital as well.
- NKNikhil Kamath
This is a little bit of a funny digression, but I don't have kids. Wouldn't the world be better if more people didn't have kids?
- ABAjay Banga
Oh, no, that'd be really bad.
- NKNikhil Kamath
Like we won't have [laughs]
- ABAjay Banga
Because eventually [laughs]
- NKNikhil Kamath
No, I-
- ABAjay Banga
In a Malthusian theory, yes.
- NKNikhil Kamath
[laughs]
- ABAjay Banga
But, but it's the end of the world. So the, the... Here's the thing. Yes, there are more people today than there ever were.
- NKNikhil Kamath
Mm.
- ABAjay Banga
And if you keep these projections going, you'll get to 10 billion.
- NKNikhil Kamath
Right.
- ABAjay Banga
And then you've got to create the food for them to live-
- NKNikhil Kamath
Yeah
- 56:00 – 1:03:00
Decency quotient over IQ EQ
- ABAjay Banga
to me, uh, I don't mean this in a, in a traditional liberal order versus conservative order.
- NKNikhil Kamath
Mm.
- ABAjay Banga
That's not what I mean. But I do mean it in terms of being fair to people and being open and honest with them, and giving them a chance to win. This idea of DQ to me is really important.
- NKNikhil Kamath
I was reading somewhere, «Because the definition of intelligence is changing so quickly in the AI world»-
- ABAjay Banga
Yeah
- NKNikhil Kamath
... the, the alpha of being able to regurgitate information is no longer as high.
- ABAjay Banga
[chuckles]
- NKNikhil Kamath
People were saying, uh, the intelligence of tomorrow might be metacognition in a way where you can look at yourself from the third person's lens and kind of like step out of the world which is so cluttered with the noise of today. That's an interesting way to think of it.
- ABAjay Banga
It is. It is interesting. I think the, uh, different way of discussing that same point-
- NKNikhil Kamath
Mm
- ABAjay Banga
... is that are you able to take very complex things, even today, in today's world-
- NKNikhil Kamath
Right
- ABAjay Banga
... and convert them into the few simple things that need to get done? You know, people think simplicity, they'll get, you'll get lectures in corporate life that, uh, the devil is in the details. Yeah, but it is the devil, and you need to think about whether the details will drag you into the devil's world-
- NKNikhil Kamath
Mm-hmm
- ABAjay Banga
... or are you able to find the simple things in those details that are actually the game changers that lead you to a world that is away from the devil. And I think that's just worth keeping in mind. Simplicity is your single biggest weapon in, in changing things. And my answer to you when you asked me what does the bank do, and I said, "I wanna create jobs. I wanna get creative jobs. I wanna kill poverty." Is because I could describe our mission and vision in long words, and will I take you with me or not, I don't know. But I know that if I focus all of these smart people and the capital they have into a simple mission of trying to find ways to create jobs for people, the complexity is inside that, huh?
- NKNikhil Kamath
Mm.
- ABAjay Banga
There's a lot of complexity in that.
- NKNikhil Kamath
Mm.
- ABAjay Banga
What we just discussed, what you said, can you think of three or four things, that's a very complicated topic.
- NKNikhil Kamath
Right.
- ABAjay Banga
But in my own simple way of thinking, I'm trying to focus on the ones that I think would be the big game changers. And that's kind of not different to what you're saying. It's also one of the topics to do with what AI may enable or not enable and, you know, we'll see. We'll see.
- NKNikhil Kamath
So when you spoke about electrification, Ajay-
- ABAjay Banga
Yes
- NKNikhil Kamath
... so I've been an investor, I've been in the stock markets all my life-
- ABAjay Banga
Yeah
- NKNikhil Kamath
... so broking, asset management, things like that. I spent a big part of the last two years investing in green energy, energy transition, storage, everything on the-- everything which is a part of that overall grid-
- ABAjay Banga
Yeah
- NKNikhil Kamath
... including electric vehicles. Now, the country we sit in when, when the narrative seems to have become anti-green in a way. I mean, I don't know how far whoever is saying it means it, but they are saying it a lot. Where do you think the opportunity lies in here from a capitalistic lens?
- ABAjay Banga
Yeah. So I... Look, I think that, uh, you shouldn't think of it as green or... 'Cause green makes it sound like the other stuff is bad.
- NKNikhil Kamath
Mm.
- 1:03:00 – 1:10:00
Energy security and nuclear opportunities
- NKNikhil Kamath
right now though.
- ABAjay Banga
Yes, unless you get to sc- how are you gonna get to scale?
- NKNikhil Kamath
Mm.
- ABAjay Banga
And the only way you'll get... It's like, you know in the old days, this tells you how old I am, but VHS and Betamax?
- NKNikhil Kamath
Yeah.
- ABAjay Banga
If one hadn't won-
- NKNikhil Kamath
Yeah
- ABAjay Banga
... the cost of tapes would never have come down.
- NKNikhil Kamath
Right.
- ABAjay Banga
You have to find scale. If you end up with eight technologies, you're not gonna get to scale. And so figuring out a way to get to scale and do a, you know, focus on a few, and then invest in those so you can create the, the cost synergies that come with it is gonna be key to SMRs.
- NKNikhil Kamath
Right.
- ABAjay Banga
And I think that may happen over the coming years. And the World Bank has gone back into nuclear energy after 40 years.
- NKNikhil Kamath
Right.
- ABAjay Banga
And we are starting with refinancing existing-
- NKNikhil Kamath
Mm
- ABAjay Banga
... uh, nuclear fleet.
- NKNikhil Kamath
Mm-hmm.
- ABAjay Banga
Whether it's in countries like India or Brazil or Romania or somebody who already have nuclear plants, by helping to extend their life, which is a cheaper way to do it. Or, uh, through SMRs. That's what we think we can help with. Or of course our knowledge to help create the right regulatory policies and safety and so on around nuclear.
- NKNikhil Kamath
And you speak a lot about climate change, Ajay. Do you think we are one adversity in a rich country away from taking climate more seriously?
- ABAjay Banga
No, I think the issue is of two parts. Climate is a word that has become politicized.
- NKNikhil Kamath
Mm.
- ABAjay Banga
So if you step away from the politics of climate, and you start thinking about what's going on for people's lives-
- NKNikhil Kamath
Mm
- ABAjay Banga
... and that's where we are having this conversation come from, the concept of resiliency, of adaptation, should never be neglected-
- NKNikhil Kamath
Mm
- ABAjay Banga
... in favor of the concept of mitigation.
- NKNikhil Kamath
Mm.
- ABAjay Banga
They're both important. And what do I mean by that? In the case of resiliency and adaptation, if you build a school that is hurricane-resistant, or homes that are flood-resistant, or roads that can resist monsoons, or seeds that are, you know, heat-adaptive, or drip irrigation instead of the old-fashioned form of flooding irrigation, which of these don't make sense? They all make sense to do.
- NKNikhil Kamath
Mm.
- ABAjay Banga
I was in Pakistan. We are financing 2.5 million homes that were impacted by floods in Sindh. They've all been built on a higher plinth with thicker walls. Kinda common sense stuff.
- 1:10:00 – 1:17:00
Forward thinking beats historical grievances
- ABAjay Banga
ask questions that I wish I could give you the right answers to. You asked a very good question. I don't know the answer to, is what I'm saying to you. And I'm struggling with it myself, because I see it now through my kids and grandkids, and I worry about it. And, you know, all I want is for them to have an opportunity like I did. That's the most important thing. There's, there's two things I tell everybody who ever asks me about, uh, family, and I tell them that you need to want your daughters, my, my daughters and my grandkids, to believe that I was not an armchair critic, that I didn't sit outside and point to how those guys should have done this, they should have done that, they should have done that. But that I was willing to roll up my sleeves and try and make a difference. And that's an uncomfortable place to be, 'cause sometimes it's easier to not be, ""Wumaidan mean ana zuruti.""
- NKNikhil Kamath
[laughs]
- ABAjay Banga
You know, it's easier to not be there.
- NKNikhil Kamath
Right.
- ABAjay Banga
So that's-- But it's, it, it's a, it's a very deep issue for me, and I've been saying it for fifteen, twenty years. And the second thing is that, you know, people ask me what my religion means to me, 'cause I'm so obviously a Sikh. But in reality, it's not as though I go to the gurdwara every day-
- NKNikhil Kamath
Right
- ABAjay Banga
... or every week even.
- NKNikhil Kamath
Right.
- ABAjay Banga
Do I think that there is a God? Yes. Do I care whether you follow the same one or not? No. Because the fundamental premise of the Sikh religion is that there is only one God, and that God is truth. Ek Omkar Satnam.
- NKNikhil Kamath
Mm.
- ABAjay Banga
And the second part of the Sikh religion that's important is that you reward yourself by serving others. Sewa. Everything else is aspects that are part of my religion, but these two are foundational to me.
- NKNikhil Kamath
Right.
- ABAjay Banga
And so all the things I do, all the answers I give, all the work I do, all the way I conduct myself, I try and keep this, you know, tenets of decency, of serving for not just for yourself but for others, of not being an armchair critic, of trying to answer with honesty and decency all I can. But it's a very difficult time with a lot of currents everywhere around you, and you just need to be careful how you swim.
- NKNikhil Kamath
If I had no filter and I really wanted to say one thing, I would say, if you go back to the stories of yesterday, remind people of that today, and either act like you're wrong and you have to make up for it, there's no end to that. I think young people today should make up the stories that they believe in by virtue of their experiences and not stories of the past. 'Cause then where does that end? Like, um, Indians, we would probably have to state the, hate the Britishers. Somebody else would have to hate somebody. The Native Americans probably have to hate the immigrants. There's no end to old stories.
- ABAjay Banga
I, I should... One of the, one of-- to me, one of the big things that made India what it is, even after independence-Is that very rarely do you find Indians complaining about what the British did not do, which is why they can't do well today.
- NKNikhil Kamath
Right.
- ABAjay Banga
Indians tend to... Of course, there is some degree of that.
- NKNikhil Kamath
Mm.
- ABAjay Banga
Because after all, how can you ignore being colonized for that long?
- NKNikhil Kamath
Right.
- ABAjay Banga
But it's not the topic du jour-
- NKNikhil Kamath
Mm
- ABAjay Banga
... in Indians. Not even when I was young, let alone today.
- NKNikhil Kamath
Yeah.
- ABAjay Banga
The topic du jour in India today is how do you do well? How do you get ahead? And I'm telling you that optimism is what, is what I feel. That feeling of tomorrow's prosperity is what drives India. You can go to many parts of the world where even now the conversation is, ""Arey yaar agar woh aise na karte toh main yahan na hota.""
- NKNikhil Kamath
Mm.
- ABAjay Banga
That, you know, if my sort of, if my grandmother had wheels, she'd be an ambulance.
- NKNikhil Kamath
Yeah.
- ABAjay Banga
You can't think like that. You have to think about forward. You can't drive a car looking in the rear view mirror.
- NKNikhil Kamath
Yeah.
- 1:17:00 – 1:23:00
Luck flexibility and taking risks
- ABAjay Banga
but even more so in the Western world, where, uh, the respect for, for, for different people of different backgrounds was ingrained into your success. Yeah, that's one. The second is because India had no infrastructure when I was growing up, bijli jati thi, sadkein kharab thi, barish aayegi the bridges get washed away. That's the world I lived in. And I was at Nestlé, where I had to get food and product across from various places to elsewhere in order to be able to succeed.
- NKNikhil Kamath
Mm.
- ABAjay Banga
You kind of learn the concept of plan B and plan C. Jugaad.
- NKNikhil Kamath
Yeah.
- ABAjay Banga
You learn it. The idea of being flexible, adaptable, and capable of moving quickly into a plan B and a plan C is inbuilt in you.
- NKNikhil Kamath
Mm.
- ABAjay Banga
It's a very useful asset in a career. You know, there's very little rigidity-
- NKNikhil Kamath
Mm
- ABAjay Banga
... in what we learn. That's the second thing that I, I see for myself. The third part of this is, uh, I mean, this is complete humility. Life is 50% luck.
- NKNikhil Kamath
Mm. Not more?
- ABAjay Banga
Uh, because other 50-
- NKNikhil Kamath
Huh
- ABAjay Banga
... is what you do with the luck.
- NKNikhil Kamath
Right. [chuckles]
- ABAjay Banga
Are you, you know, are you hanging around there-
- NKNikhil Kamath
Right
- ABAjay Banga
... and saying, "Ji main train mein passenger huga"?
- NKNikhil Kamath
Mm.
- ABAjay Banga
Or do you plan to be in the engine room-
- NKNikhil Kamath
Mm
- ABAjay Banga
... managing where that train is going?
- NKNikhil Kamath
Mm.
- ABAjay Banga
That's up to you. Will you take the risks you need to take-
- NKNikhil Kamath
Mm
- ABAjay Banga
... to make something out of that luck? But it is 50% luck for everyone.
- NKNikhil Kamath
Mm.
- ABAjay Banga
And I would argue that a lot of people leave their luck on the station platform and forget about it.
- NKNikhil Kamath
Mm.
- ABAjay Banga
That's a problem.
- NKNikhil Kamath
They don't take cognizance of that.
- 1:23:00 – 1:23:55
Closing message on optimism
- ABAjay Banga
is those companies in India-
- NKNikhil Kamath
Mm
- ABAjay Banga
... which have developed into that space, and today have been sold off because of fears that they would be easily replaceable by machines, is there a great opportunity there? And you know, you're back-- Because you're in the stock business, this is all about the P/E you see today-
- NKNikhil Kamath
Yeah
- ABAjay Banga
... versus the P/E you perceive them to be capable of getting.
- NKNikhil Kamath
Yeah.
- ABAjay Banga
And I think that's a very good topic, but that's, again, way beyond my competency.
- NKNikhil Kamath
Uh-huh. Any last message, Ajay, for our audience?
- ABAjay Banga
Just that every young person has to be optimistic. You've got to think about your future and realize that you can make a difference by embracing your own optimism. You have to have that.
- NKNikhil Kamath
Thank you for doing this.
- ABAjay Banga
Thanks.
- NKNikhil Kamath
I hope you had a fun time.
- ABAjay Banga
Absolutely. Thanks a lot.
- NKNikhil Kamath
Thank you.
- ABAjay Banga
See you again.
- NKNikhil Kamath
Cheers. [outro music]
Episode duration: 1:23:57
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