Luis Miranda
Luis Miranda
Image: Shutterstock(Picture for representational purpose only)

Image: Shutterstock(Picture for representational purpose only)

A couple of months back, I caught up in New York with Victor Menezes, former vice chairman of Citicorp. Victor was my hero in my formative years and my dad would often talk about how this Indian had become so successful in, at that time, the world’s largest bank. Later, Victor became one of my go-to people when I wanted advice.  He played a large role in my returning to India.

While waiting for my train to take me back to the city, we got talking about the importance of being satisfied with what we have and not taking unnecessary risks to make more money when we already have enough. He told me an interesting story. Many years back, authors Kurt Vonnegut (who wrote Slaughterhouse-Five) and Joseph Heller (who wrote Catch-22) were at a billionaire’s party on Shelter Island. Vonnegut asked Heller, “Joe, how does it make you feel to know that our host only yesterday made more money than your novel Catch-22 earned in its entire history?” Heller replied, “I’ve got something that he doesn’t have.” Vonnegut was surprised and asked him what that can be to which Heller replied, “The knowledge that I have enough.”

When I quit working full-time in 2010, I knew that I ‘had enough’. I had friends who had a lot more money than I had and many of them felt that they did not have enough. Of course I would have liked to have as much as they had, but I felt that my boat had already sailed and that if I tried to catch up, I may have to take unnecessary risks and could risk losing what I already had. And anyway, we would have ended up donating that additional money to someone else; what more could we buy with all that additional money?  People often measure success in terms of money and ignore other measures of success like personal reputation, a happy family life and good health. I just found it easier to focus on the non-monetary definitions of success and considered myself lucky to have built a safety net that was large enough. Over the years, people have commented on how ‘brave’ it was for me to get out of the rat race before I turned 50. I never considered that decision to be ‘brave’. Instead I found it to be just logical.

In fact, the most valuable asset you can have is your personal reputation. And that is something I will fiercely fight to preserve. The Rajat Gupta episode played a large role in my decision making way back in 2010. Why would a man, whom we all admired and held up as an icon, want to risk his reputation after ‘having enough’?

Yesterday I was sitting with a friend who had just encashed his stock options and had built his nest egg. We talked about having enough and how he should now focus on spending a lot of quality time with his family before embarking on his next full-time assignment.

So all of you out there, take a pause and think about whether you have enough. BS Nagesh quit his executive role at Shoppers Stop when he turned 50 to start TRRAIN – Trust for Retailers and Retail Associates of India. He realised that he had enough and that he was more passionate about empowering and training people in the retail sector. Life became even more exciting for Nagesh and me after 50 because we realised that we had enough!

Marvin Zonis, professor at Chicago Booth, and Mike Kaufman recently co-authored an article, ‘Donald Trump and The Great Escape from Humiliation" in which they argue that Trump appeals to Americans who, over the past 15 years, feel humiliated

Marvin Zonis, professor at Chicago Booth, and Mike Kaufman recently co-authored an article, ‘Donald Trump and The Great Escape from Humiliation” in which they argue that Trump appeals to Americans who, over the past 15 years, feel humiliated

Image: Joseph Sohm /

A lot has been said about the level of intolerance in India. We are not alone and we see the same in the other great pillar of democracy on this planet – the US. What does this imply for the future of democracy and why have differences of views become so polarised?

Our daughter is currently studying at Franklin and Marshall College. The president of F&M, Daniel Porterfield, recently wrote an article in Forbes where he referred to one of the courses taught there – ‘Democracy and Disagreement’ by Stephen Medvic. The course pushes ‘students to grasp the value of conflicting ideas in a democratic society’. There are two typical responses to conflict – avoidance and demonising opponents. In the past, we avoided debating sensitive topics in order to be politically correct; they were simply swept under the carpet. Today, we have swung to the other side of the pendulum where opponents are demonised – we see a lot of that in the US Presidential Primary debates with the likes of Donald Trump. In India, we see the same in the debates in Parliament where our beloved members of parliament have perfected the art of preventing Parliament from working efficiently. Nearly every issue gets blown out of proportion thanks to social media, prime time TV, etc. Both these extreme responses – avoidance and demonising opponents – hurt democracy. Professor Medvic talks about why we need to foster discourse so that each one appreciates the other’s point of view. We live in a dangerous world where no one wants to listen to the other side and it is becoming very difficult to solve problems. Debate is reduced to shouting matches and violence on television, in Parliament and on the streets. As a result, whoever shouts the loudest or has the police on their side wins the argument, at least in the short term.

Marvin Zonis, my professor at Chicago Booth, and Mike Kaufman recently co-authored an article, ‘Donald Trump and The Great Escape from Humiliation’. They argue that Trump appeals to Americans who, over the past 15 years, feel humiliated. This humiliation has diverse sources – the terrorist attack on the World Trade Centre, the loss of the wars in Afghanistan and Iraq, the stagnation of wages, the election of a black president, the economic collapse of 2008, the rise of the LGBT movement, etc. A large part of America feels humiliated in this new world and the consequence of this humiliation is rage. Trump panders to this rage.

In India also, despite our economic growth, there is still a sense of frustration. One of the reasons why Modi got elected was that people were angry with the way corruption had grown and economic growth had slowed down. Modi was the outsider in Delhi, just like Trump is in America. Modi promised to make India great, just like Trump promises to make America great.  When people are angry, they vote for change. And change need not be bad.

When people get angry they also demonise opponents. They become belligerent and intolerant. They agitate. To address this anger we need to focus on the real issues behind it – a growing feeling that the future looks tougher and less fair.  Create jobs and control inflation – that’s all that is required to reduce this anger and get reelected in 2019.

The multiple uses of Aadhaar include social security schemes (like public distribution systems, NREGA), subsidy delivery, government services (like passport and land titles), e-KYC (to open bank accounts) and voting. (Image: Mansi Thapliyal / Reuters)

The multiple uses of Aadhaar include social security schemes (like public distribution systems, NREGA), subsidy delivery, government services (like passport and land titles), e-KYC (to open bank accounts) and voting. (Image: Mansi Thapliyal / Reuters)

Let’s hope that Parliament actually works this session and that petty politics does not derail the efficient operation of our democracy yet again. One of the important pieces of legislation that cuts across party lines was tabled a few days back – the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Bill, 2016.

Aadhaar was the historic innovation brought in by the previous UPA government and steered by Nandan Nilekani, the chairman of the Unique Identification Authority of India (UIDAI) and a co-founder of Infosys. The BJP initially criticised it and there were fears that Narendra Modi would scrap it after becoming prime minister. But in a remarkable turnaround, after a meeting in July 2014 with Nilekani, Modi became a big champion of Aadhaar and is making it a key pillar of his reforms agenda. The introduction of this bill is a big step towards catapulting India forward in the digital era, dramatically improving the efficiency of public delivery systems and reducing corruption and black money. The Aadhaar project is the world’s largest national identification project and the way it has been rolled out is something that all Indians should be proud of. At the end of February 2016, 980 million numbers had been issued – something that most people said would be impossible in a little over five years.

There have been a few of concerns about Aadhaar, mainly related to privacy and citizenship. The Aadhaar Bill does not make Aadhaar a proof of citizenship or domicile. It is only a unique 12-digit number that each resident in India can use, which contains biometric and demographic data stored in a centralised database.

And the bill is strong on privacy. It limits the use of information to the purpose for which the user has given consent. Users can access their own information and rectify it. No demographic or identity information can be displayed publicly. The system cannot collect data beyond essential details like name, address, date of birth, sex, email address and phone number. It cannot collect details on race, caste or religion. There are stringent restrictions on how the information can be accessed and used for national security reasons. Finally, there are stringent penalties, including imprisonment, for breach of privacy.

The Aadhaar number helps in delivering a host of services and products in a seamless manner, starting off with Direct Benefit Transfers. The savings from this itself will more than cover the cost of the project. As Nilekani and Viral Shah outlined in their book, ‘Rebooting India’, the multiple uses of Aadhaar include social security schemes (like public distribution systems, NREGA and Sarva Shiksha Abhiyaan), subsidy delivery, government services (like passport and land titles), e-KYC (to open bank accounts), voting and biometric attendance systems. This bill gives a statutory framework to make all of this happen.

Who doesn’t want Aadhaar? Those who fear automation. Those who profit from the inefficiencies in the current system. Those who have something to hide. Those who fear losing power. Those who fear change. These people will fight hard against the higher level of transparency and efficiency that Aadhaar will bring in.

It is important that we support this bill and ensure that it becomes law.

India's Congress Party President Sonia Gandhi (R) discusses a point with former Indian Prime Minister P.V. Narsimha Rao  (Photo: Getty Images)

India’s Congress Party President Sonia Gandhi (R) discusses a point with former Indian Prime Minister P.V. Narsimha Rao (Photo: Getty Images)

I was a young FX dealer in 1991 when PV Narasimha Rao took over as prime minister and, together with Manmohan Singh, opened up the Indian economy. I had returned to India a couple of years prior to that, much against the advice of every Indian I knew. Many years later, after the economy opened up, people told me that I had timed my return perfectly and I had showed great foresight. The honest truth is that it was a ‘Forrest Gump’ moment – I was being interviewed by Jaidev Iyer in New York for a job with Citibank Asia Pacific and he sold me the dream of returning to India, marketing FX products and getting paid peanuts! It sounded very tempting and here I was. No great foresight on my part at all that we were on the cusp of a major transformation in India.

Fast forward to 2016, the 25th anniversary of the big bang opening up of the Indian economy in 1991. Most Indians today do not remember what life was like under a socialistic regime – half the country was not even born by then! Some of them are disillusioned with the semi-capitalistic society we live in today … a world where we have more economic freedom, where consumers have choice (do you remember the Bajaj scooter, HMT watch, Ambassador and Fiat cars, Indian Airlines and the waiting period to get a telephone or gas connection?), where entrepreneurs and employees have legally made wealth way beyond their dreams, where most of the poor are better off and where India is globally treated as a super power. Instead, the media focuses on inequality and corruption, and we forget how far we have travelled since 1991. In order to remind us about those dark days, the Centre for Civil Society has launched a portal – – to crowd-source stories about what life was like 25 years ago and before.

At the launch of the portal recently in Delhi, we had an interesting panel discussion with Jairam Ramesh (former minister, whose latest book is To the Brink and Back – India’s 1991 Story), Arvind Virmani (economist and former bureaucrat), Didar Singh (secretary general, FICCI) and Praveen Chakravarty (Visiting Fellow, IDFC Institute). My four key takeaways from that engaging conversation are:

1. Without a crisis, big bang reform is unlikely in India. The changes in 1991 would not have taken place if there was no risk of a default and a bailout was needed. Yes, Virmani did talk about how GDP tripled in the 80s because of incremental changes that took place under Rajiv Gandhi. But that was nothing compared to the historic changes that took place in mid-1991. There was no political support for the 1991 budget – only two Congress MPs backed it at the Congress Parliamentary Party meeting, while 58 ranted against it. The finance secretary and the chief economic advisor were against these changes and so were the minister for industry and his minister of state. Many vested interests protested loudly, starting with the Bombay Club. Raghuram Rajan, the RBI governor, wrote in his first book, Saving Capitalism from the Capitalists – the biggest opponents to capitalism are the entrenched capitalists. Ramesh has an interesting quote in his book on what Manmohan Singh wrote way back in 1972, “It would be tragic if we were to become prisoners of instruments, which howsoever suitable at one stage of development, turn out to be fetters on future development.”

2.   Political leadership is key. While the technical architecture of the opening up of the economy could be attributed to Manmohan Singh, it was Narasimha Rao who pushed it through Parliament, labour leaders and the bureaucracy. Ramesh said that Manmohan backed the reforms because of conviction, whereas Narasimha Rao backed the reforms because of compulsions. There was a lot of opposition to the ‘bullying’ by the IMF and 35 left-leaning economists protested, saying India should default – the comparison to recent events in Greece is  interesting.  Between 1991 and 1994, very few people praised the government’s economic policies in public. The decision to hike up prices, especially urea prices, looked to be political suicide by a minority government.  But Narasimha Rao backed these measures and pushed them through.

3. Preparation is needed. As I learnt from Ramesh’s book, a lot of the analysis and work needed to put through these reforms was already done in the 80s. But there was limited political will and no crisis in the 80s to push all these changes through. If all that hard work had not been done in the 80s, it is doubtful whether the government would have been ready in July 1991 to push through such momentous trade and economic liberalisation measures.

4. Focus is needed. Narasimha Rao’s government focussed mainly on one issue at that time – the opening up of the economy and avoiding a debt default. There was no plethora of initiatives that distracted his government’s attention and they focussed on pushing through the liberalisation measures in Parliament amidst huge opposition from within and outside the party, and despite being in a minority.

So what are the lessons for us in 2016, from 25 years ago? Unless we have a crisis, we won’t see big bang reforms. We will have a lot of incremental reforms that are politically palatable. Policy change involves a lot of back room influencing, where mere rationality is not necessarily relevant. At the same time, Prime Minister Narendra Modi is focusing on fixing some of the architecture that is required for long-term positive change – making government accountable, clamping down on corruption, stimulating entrepreneurship and, hopefully, building out the much-needed infrastructure. A lot of preparation has already been done in recent times on what needs to be done. Over the past few years, innumerable committees have made recommendations on various fronts. So the government knows what to do. Didar Singh, interestingly, commented that even after 25 years of liberalization, we still haven’t significantly reformed labour and land regulations. Today, thanks to the deplorable condition of most other large economies, many global investors rank India as the hottest destination to invest in. Instead of basking in the glory of this favourable climate and saying that there is therefore no need to change, it is indeed an incredible opportunity for India to make bold reforms that bring in huge capital flows, build infrastructure, create jobs, reduce poverty and create prosperity for all.  There is a fear that we will see more control by the state and a larger role for the public sector. Again, to go back to what Manmohan Singh wrote in 1972, “There is certainly a need to recognise that the knowledge available to civil servants is not necessarily superior to that of entrepreneurs and that the fact that some direct controls are good does not mean that more controls are better that less controls.”

Modi’s legacy could be that, despite no immediate crisis, he pushed through big bang reforms that propelled India forward for the next 25 years.

If you want to learn more about what life was like before 1991 during the licence raj, please log onto CCS looks forward to adding your stories to this website.

Disclosure: I am Chairman, Centre for Civil Society.

The success of PPPs “will depend on a change in attitude and in the mind-set of all authorities dealing with PPPs, including public agencies partnering with the private sector, government departments supervising PPPs, and auditing and legislative institutions providing oversight of PPPs

The success of PPPs “will depend on a change in attitude and in the mind-set of all authorities dealing with PPPs, including public agencies partnering with the private sector, government departments supervising PPPs, and auditing and legislative institutions providing oversight of PPPs

Image: Shutterstock

Dr Vijay Kelkar recently gave me a copy of the ‘Report of the Committee on Revisiting and Revitalising Public Private Partnership Model of Infrastructure’. He chaired the committee that wrote it and the price of him buying dinner for my wife and me was that I had to read this report – there is really nothing like a free meal!

What excited me the most was paragraph four of the Executive Summary. The success of PPPs “will depend on a change in attitude and in the mindset of all authorities dealing with PPPs, including public agencies partnering with the private sector, government departments supervising PPPs, and auditing and legislative institutions providing oversight of PPPs”. The report goes on to elaborate what this change in attitude means: (1) A move from ‘transaction’ to ‘relationship’ and service delivery for citizens; (2) A ‘give and take’ approach is needed; (3) We need to develop a mechanism for dealing with uncertainties in long-dated contracts. Every decision cannot be treated upfront as mala fide. Some months back, I had written on the trust deficit. This report also talks about the need to foster trust.

This is, in my view, the most important part of the report. I have been on the boards of infrastructure companies where we have had directors from both the private and public sectors (including Delhi International Airport, Gujarat State Petronet and Gujarat Pipavav Port). Directors have to vote in the interest of the company and not in the interest of the shareholders they represent – this is the law and one of the key corporate governance principles. However, I invariably found that directors (both public and private) did not take off their investor/shareholder hats when they voted on the board. This conflict was always a challenge because of the lack of trust. If we always assume mala fide intentions, we will always have conflict. In this whole debate, the interest of the citizens is forgotten. The basic purpose for a PPP is to offer a superior service to the consumer. Superior service does not necessarily mean ‘lowest cost’ (‘Paying for Good Infrastructure’), but service of a high standard at an ‘appropriate, fair cost’. The report also mentions that it is not a sin for the private participant to make money; the profit motive of the private sector can be compatible with the service motive of the public sector.

Contracts cannot remain unchanged for 30 years, let alone 10 years… marriages don’t last that long! So a mechanism that allows for renegotiation of contracts is needed. Here, many private sector bidders have created the problem by colluding with the government authorities. They put in a ridiculous, unprofitable bid in the knowledge that they can renegotiate it later. Therefore, processes have to be put in to prevent such bidders from taking advantage of such mechanisms. Clause 4.3.6 of the report talks about renegotiation triggers (project distress has to be material, it should not be caused by the private party, it is likely to cause adverse outcomes for the government and/or users, the cost to the government is less than the cost of doing nothing, it is likely to have social benefits and there is no material change in the risk allocation to the government). The DEA of the ministry of finance has issued a guidance note titled ‘Renegotiation Framework’ that addresses some of these issues. This renegotiation has to work both ways. It should not only apply when the private sector is losing money for situations beyond its control; it should also apply when the private sector is making money unfairly thanks to extremely favourable, unexpected conditions.

Civil servants are exposed to unnecessary levels of scrutiny. So it is good that the report also asks for amendments to the Prevention of Corruption Act, 1988. This Act does not distinguish between genuine errors in decision making and acts of corruption. Here again, if the CAG, CVC or CBI starts with the assumption that the intent was mala fide, why would a civil servant want to make a decision that appears to unduly favour the private partner? They would rather go to court or to arbitration and let someone else make the same, fair decision. This amendment is urgently needed to help government officers make bona fide decisions quickly.

Finally we have to deal with legacy issues. The deteriorating quality of infrastructure loans is one of the major challenges facing the banking sector. It also impacts the infrastructure sector since fresh debt is difficult to come by for new projects. A CRISIL study of October 2015 states that 26 of 80 operational highway projects can’t service their debt because of lower traffic. The ministry of statistics and programme implementation reports that four out of 10 central government infra projects are behind schedule. ASSOCHAM reports that investments worth Rs 12 lakh crore ($ 200 billion, that’s a lot of zeroes) are stuck due to land acquisition problems, costly financing and unfavourable market conditions. The report sets frameworks for handling these legacy PPP contracts.

I just spoke to a leading infra fund manager who said the report was not a great one since it operated at a 30,000 ft level. My response was that unless these critical matters are settled, we will never see PPPs flourish at a large scale in India.

Two of the reasons why there is renewed focus on economic inequality today are the excessive consumption by the rich and fears that the future will continue to be tough

Two of the reasons why there is renewed focus on economic inequality today are the excessive consumption by the rich and fears that the future will continue to be tough

Image: Shutterstock

I was visiting my daughter last weekend and I picked up a book at the F&M College Bookstore – On Inequality by Harry Frankfurt, professor emeritus of philosophy at Princeton University. It is a short book that I finished quickly enough to write this blog on my flight back from America. Frankfurt is also the author of the bestseller On Bullshit.

In his preface, Frankfurt refers to the impact that last year’s bestseller by French economist Thomas Pikkerty (Capital in the Twenty-First Century) has on the discussion concerning the growth of economic inequality in our society. Capitalism has been under increasing threat after the 2008 global financial crisis and socialistic ideas are gaining more ground across the world. Obama recently said income inequality is “the defining challenge of our time”. In India, also, the benefits of the ’90s liberalism are being challenged by academics, politicians and some sections of civil society. Having studied at the University of Chicago and being associated with the Centre for Civil Society (CCS), I find this wave of ‘socialism’, or anti-capitalism, distressing. Which is why I found Frankfurt’s book to be a very interesting read: He argues that poverty, and not economic inequality, is the biggest challenge of our time

He starts off with an imaginary conversation:

First man: “How are your children?”

Second Man: “Compared to what?”

This conversation reminded me of a Calvin and Hobbes cartoon that I use a lot when talking about happiness. In the first frame of that cartoon strip, Calvin, another great philosopher, is smiling because he is happy and content. But then he realises that he is not euphoric, and becomes no longer content. His day is ruined because he is no longer happy. And in the final frame, he says, “I need to stop thinking while I’m ahead.” The same with the second man in that conversation. Maybe his children are doing well. Maybe they are not doing well. But when he starts comparing them to other children, there is a higher likelihood that he won’t be happy with the way his kids are doing. And the same with economic inequality. Instead of focusing on relative wealth or poverty, we should focus on the shameful levels of absolute poverty that we see around us. (A side note – I am only referring to economic poverty in this blog and not emotional or spiritual poverty).

The biggest challenge today, with all our affluence, is that there is a lot of poverty around, and this is not just in India. In recent months, I have seen so many homeless people sleeping on the streets of London and the US. I have taken doggy bags on my recent trip to give to beggars that I see on the streets in the US. That is the challenge. Why are some people so poor that they cannot get out of the poverty trap? It is not because they are all lazy. Someone from Leaders Quest (LQ), an organisation I am involved with, recently told me about their interaction with a homeless lady in London. She was a reasonably successful person who had fallen on hard times and took to begging. What hurt the most, she told the LQ group, was the look of people who passed her by – they felt that the fault was hers, not society’s. Her challenge was that, despite trying, she just couldn’t get back onto the ladder and no one wanted to help her get back.

But back to Frankfurt… he argues that economic inequality is not morally objectionable. What is undesirable is that economic inequalities sometimes lead to inequalities of other kinds which undermine our commitment to democracy; an example could be undue social and political influence by the wealthy. But these undesirable influences can be managed by proper legislative, judicial, regulatory and executive monitoring. Of course this is tougher to do and hence it is politically easier to talk about reducing economic inequality. Referring to Obama’s comment, Frankfurt says the issue is not about income inequality but that there are too many Americans who are poor. Reducing inequality will not necessarily help the poor get out of poverty. It comes back to the famous argument last year between Amartya Sen and Jagdish Bhagwati on whether we re-split the same pie or make a bigger pie. Communism did not reduce poverty in the communist countries on a sustained basis and in India, decades of socialist policies helped keep a large part of India in poverty, while other countries leapfrogged past us.

Two of the reasons why there is renewed focus on economic inequality today are the excessive consumption by the rich and fears that the future will continue to be tough. Frankfurt agrees that gluttony is ugly and morally offensive when there is so much poverty around. I am reminded of Marie Antoinette’s alleged quote (it is unlikely that she actually said it) when she was told that the peasants were starving because they did not have bread to eat, “Then let them eat cake.” She ended up losing her head during the French Revolution. This should be a reminder for those who indulge in over-conspicuous consumption – their heads could get cut off!

Frankfurt goes on to say that it is not morally important that everyone should have the same. What is morally important is that everyone should have enough. But the theory of equality is easier to articulate than the theory of having enough – how much is enough? I recall the furore after Montek Singh Ahluwalia, vice chairman of the Planning Commission, came out with new definitions of poverty. What does it mean for a person to have enough?  Frankfurt refers to a doctrine of sufficiency where having enough to get by is not enough since people who are always living on the brink are not content. Hence, having enough means that you should have some comfort that you will be provided for in the future also. A first step for a place like India is of course to make sure that people should have enough for today at least. This is more important than worrying about economic inequality in India. Of course, the rich should be encouraged to share their wealth, but by setting up disincentives for people to seek economic wealth, we run the risk that entrepreneurship will move offshore, tax evasion will increase and we will revert to the low rates of growth that we saw before the 1990s.

Frankfurt goes on to say that evil lies, not in that some others have better lives, but that bad lives are really bad. Experiences of being ignored (like that lady in London) may be profoundly disturbing. Demand for equality is different from demand for respect.

CCS and Friedrich Naumann-Stiftung für die Freiheit (FNF) published a very interesting booklet titled Why is India Poor?. This is also the theme of the popular Freedom Caravan series that we have run over the last two years across campuses in India. In it we argue that institutions and policies determine economic success. The most important institutions and policies that help the poor get out of poverty are those that enable economic freedom.  You can download a free copy from our website –

So let us stop talking about economic inequality and focus instead on policies that remove poverty and ensure that everyone is treated with respect. Let us focus on setting up institutions and policies that enable economic freedom.

Knowing when to exit the stock market is important

It is important not to get carried away by the euphoria in the markets

Image: Shutterstock

August was an interesting month. Among other things, China devalued its currency—the yuan. Though the devaluation was just 2.8%, it sent a huge signal. And when China finally sneezed, the global equity markets caught SARS.

And now, traders and investors on Dalal Street want to know why the Indian stock markets fell. Being an accidental investor, I have a lot of theories but frankly, the Uber driver I met a few months back would have a better story. Interestingly, discussions on the falling markets stopped when news of Indrani Mukerjea and her extremely complicated family broke.

But, let’s get back to the question of falling stock markets. The counter-question I ask people in response to their question is, “Why did the market go up in the first place?” No one asked me that question over the past year. Because they were all brilliant investors who were masters of their destiny and knew how to invest in an exceedingly smart manner. And there was also the Modi effect.  But when the markets collapsed, it is not because they were bad investors … it was because of China, Obama, Modi … but never because of their greed or inability to take money off the table.

Knowing when to exit an investment is important. One of my favourite stories on exiting is a personal one. It relates to the employee stock ownership plan (ESOP) that I earned at HDFC Bank and IDFC. We were all smart people who learned during our MBA days about diversifying our portfolios to reduce risk. So, whenever my HDFC Bank stocks vested, I sold a part and invested the proceeds in various mutual funds for diversification. HDFC Bank’s shares have outperformed all these funds in the past 20 years. So much for diversification and knowing when to exit!

Having learnt my lesson at HDFC Bank, I decided not to sell any of my tiny IDFC ESOPs when they vested. But, IDFC underperformed the markets. So much for having faith in your own company’s stock and knowing when to exit! The only smart investor on our team was our executive assistant who sold her IDFC stock at its peak.  The importance of knowing when to exit can’t be understated. We exited stocks like GMR Infra and Hotel Leela Ventures near their peaks, but did not do the same with Ashoka Buildcon and Gujarat Pipavav. And our carried interest had a direct correlation with these decisions. Knowing when to exit is very important.

Back to why did the markets go up in the past year or so? You knew that the China story was not sustainable without a correction. You knew that FII inflows can easily switch to FII outflows. You knew that reforms in India would take some time to fall in place. Yet, you did not ask ‘Why are the markets going up?’ Because, if you did, you would have been called a luddite, like RBI governor Raghuram Rajan was famously called by the American economist Larry Summers, when the former raised questions in 2005 about the huge risks lurking in the global financial markets.

The only galloping prices that people questioned in recent times were the valuations of e-commerce businesses.  It is interesting how investor interests drive business models. There was a time when companies added ‘Tech’ to their names and investors chased them. Then they added “Infra” to their names and investors jumped over one another to get a piece of the action. Now they add an e-commerce piece to their business model and investors start talking to them. What a ridiculous situation when entrepreneurs have to modify their business models and dance to the tune of investors, some of whom are as clueless as the Uber driver I mentioned.

Coming back to that Uber driver … he is a very enterprising guy who was doing well and decided, many years back,  to become a day trader in the stock market because stock prices were going up. He quit his job to capitalise on the rising stock prices. He never asked why markets were going up. He is now driving his Uber and staying away from the markets.

In the immortal words of Pitbull, “Where do we go? (Where do we go, where do we go … from here)?” India still looks good… oil is way cheaper, our current account and fiscal deficits continue to decline, inflation is down (though onion prices seem to be outperforming the Sensex) and reforms are taking place, albeit at a slower pace than what we expected after listening to Modi. So the markets will soon be back up.

And then, remember to ask the question “Why are the markets going up?”

MentoringImage: Shutterstock

Over the years I have benefited from the advice of many people. Starting off with my mum and dad (often that ‘advice’ could be termed ‘nagging’ or ‘yelling’; we’ve all been through that). But that helped shape who I am. People ask me why I became a chartered accountant and I reply, “Because my dad told me to do so.” I have the same response for why I pursued an MBA. And I’m happy I followed his advice.

Since then, I have been fortunate to have been advised by the likes of professors Marvin Zonis and Harry Davis, when I was at Chicago Booth and successful professionals like Victor Menezes, Deepak Parekh, Jerry Rao, M Shekar Chandrashekar, Narendra Jhaveri (who passed away recently) and Vijay Kelkar. And for nearly half my life there has always been my wife, Fiona, to be my sounding board when I needed advice—and when I did not need advice—and sometimes that ‘advice’ could be termed ‘nagging’.

Somewhere along the way, I was introduced to a new word to describe all of this—‘mentoring’.

A few years back, I was with one of my mentors, Jerry Rao, speaking at Chicago Booth. Jerry talked about how lonely it can sometimes be, at the top. I remarked that it wasn’t lonely for me since I had surrounded myself with mentors like him, whom I can go to for advice on personal and professional matters.

And all this mentoring has helped me reach where I am today—54 years old and unemployed! Over the years, I have returned the favour by mentoring a lot of younger people who have gone on to do great stuff. And I tell them the same stories that I learnt along the way and add key themes that I picked up, themes like ‘focus on the important things in life’ (thanks, Shekar), ‘be cleaner than Caesar’s wife’ (thanks, Dr Kelkar), ‘leaders have to be both actors and directors to bring about change’ (thanks, Harry).

If you were to ask Khashiff, our son, what he learnt from his dad, he would either say, “The answer lies somewhere in the middle” or “Don’t ever mess with your wife”. And if you were to ask Mihika, our daughter, the same, she would probably say, “We have to face the consequences of the actions we choose”. Sometimes, these mentoring relationships were semi-formal, like for Teach For India and Ashoka Fellows and sometimes I felt that I didn’t really add value.

A few years back, a few of us (Roger Pereira, Anthony D’Souza and Leslie Lobo) got together to see how we could help young Catholics in Mumbai. With the support of the Cardinal and a larger group (the G-20) we started a mentoring programme in Mumbai called ‘Take Charge’. In our search for partners to support us, I came across mentoring organisations like Mentor Me India and foundations that were looking to support mentoring like Rosy Blue Foundation.

New words get coined to reflect new trends or rebrand old ideas… like ‘life coaching’. I strongly believe that mentoring is a great way to engage employees, especially as CSR engagements want to involve ‘volunteering’. Mentoring is a more impactful way to volunteer because you are trying to help a younger person be a better, more successful person by drawing on all your own experiences.

Mentoring helps the mentor also become a better person. Mentoring is not just career counselling. It involves a lot more—building a relationship of trust, helping the mentee identify her strengths and weaknesses and work on them, helping the mentee discover a passion that’s worth focussing on, etc. And when I look back at all the mentoring that I have received, career guidance was only a tiny part. Mentoring is not lecturing … our children and youth get enough of that. Mentoring is not transactional. Mentoring is a process of building up a relationship with someone you can go to for advice, to let off steam and, often, to be told the hard truths.

Running a proper mentoring programme is not easy. And there is so much to learn by sharing experiences, both globally (like Big Brother) and locally. If you are interested in learning more about the power of formal mentoring programmes, that are scalable, and want to be a part of the ecosystem to build out mentoring in India, sign up for the 1st National Mentoring Conference in India on August 7 and August  8 being put together by Mentor Me India and Rosy Blue Foundation. For more details send an email to


On some remote stretches in Ladakh, we never came across another person for stretches of over an hour


Image: Natalia Davidovich / Shutterstock

Our family recently did a one-month road trip from Mumbai to Leh and back. Before you ask, yes, we still talk to each other after the trip! Our daughter, Mihika, pushed for the road trip and we dropped off our son, Khashiff, in Leh where he spends three months with 17000 ft Foundation. We drove 7,800 km, covering nine states – Maharashtra, Madhya Pradesh, Uttar Pradesh, Rajasthan, Punjab, Jammu & Kashmir, Himachal Pradesh, Haryana and Gujarat. This reminded me of the road trips we took as kids, packed in an Ambassador, where we saw all the temples and hill resorts of South India.

We had amazing roads for most of the trip… the roads in Madhya Pradesh, Rajasthan, Maharashtra and Gujarat stood out. Driving on four-lane highways (sometimes six-lane) was a great pleasure. And I thanked former Prime Minister AB Vajpayee and his team led by Major General Khanduri and the NHAI chairman Deepak Dasgupta. The Golden Quadrilateral (GQ) kick-started the highways revolution in India and is a great example of how enlightened leadership at the top, backed by superior execution (both in the public and private sectors), can create world-class infrastructure in India. There is a lesson here for Prime Minister Narendra Modi as we fix the other sectors in India. The Congress government from 2004-2014 unfortunately blew away the opportunity to build on the GQ success. We paid about Rs 4,000 in tolls, mainly in these four states, and it was worth every rupee. It was great driving on some of the roads we had invested in when I was at IDFC through L&T Infra, Ashoka Buildcon and GMR. The best road was NE-1 between Ahmedabad and Vadodara.

Some roads were bad, especially in Jammu & Kashmir and Himachal Pradesh, but this was because of the heavy snowfall in these states. The Border Roads Organisation (BRO) of the army does amazing work to ensure that the Sonmarg–Leh and Leh–Manali roads are open for half the year. We passed through some mind-blowing terrain in these areas and in some places, we had no roads to drive on. It was pure nirvana driving on our own, even when we were off-road. On some remote stretches in Ladakh, we never came across another person for stretches of over an hour. And driving our Toyota Fortuner 4WD over some of the mountain roads where the BRO had to cut through ice was amazing. We had no puncture on the entire trip.

What did we find painful? Cows all over the highways in Madhya Pradesh and people driving on the wrong side of the road at many places. It was frustrating getting stuck in rush-hour traffic in Sagar with tractors all over the place. Driving at night is not easy-some heroes drive without their headlights on and most truckers do not believe in having rear lights. And truckers and other idiotic drivers drive slowly in the fast lane. A frustrating experience is to be stuck behind two huge trucks struggling to climb a hill and all you can do is patiently wait behind them. This highlights the need for proper training of drivers and proper policing of highways. Roads Minister Nitin Gadkari tried but blames vested interests for not being able to push his reforms through (a flashback to Manmohan Singh’s complaint about coalition politics). We got stuck often in Jammu & Kashmir because of migrating sheep and goats… but at least they had a purpose to be on the road; the cows just hung around highways without a purpose. And the Himachal Pradesh tourist car drivers are the worst we came across – no wonder the Supreme Court had to step in to protect the Rohtang Pass. There was only one place we were totally disappointed with – Manali. When we saw a line of cars waiting to enter the old town, we simply decided to skip Manali and found a lovely place on the way to Kulu.

Another great experience was to do with telecommunications, another success story that the Congress government failed to capitalise on. We had mobile connectivity every day, except when we were in remote parts of Ladakh (BSNL is needed there). As a result, we could use Google Maps for our entire trip. The only time we had absolutely no connectivity was when we were in South Ladakh getting to Tso Moriri  and then getting back to the highway.

There are other benefits of good telecom technology. We stayed at so many charming small hotels, havelis and guest houses thanks to TripAdvisor and other websites. The internet has clearly helped small entrepreneurs in the tourism industry. And you don’t need to carry a whole load of money when you start your trip. ATMs can be found everywhere. State Bank of India had the most number of ATMs in rural India, but most of them did not work. It was a sad reflection on public sector banking since the private sector bank ATMs next door would be working. Our phones were on Vodafone and Airtel, which was helpful as in many places, one of these service providers couldn’t connect. We couldn’t get data services in a few places in the mountains, but Wi-Fi was available at most places we stayed at.

We left Mumbai on May 25 with a rough idea of our route but with no hotel bookings. As a result, we could explore places that people suggested en route. And these ended up being the highlights of our trip … the Tribal Museum in Bhopal, 10,000-year-old rock paintings in Bhimbetka, admiring the ruins of Orchha while rafting down Betwa River (all thanks to suggestions of our friend Tino DeSa, the chief secretary of Madhya Pradesh), spending time with farmers in Barmer who are being helped by TechnoServe/Cairn, the Golden Temple at 4 am, the sound of the roaring river during the night in Sonmarg and the amazing Chittorgarh Fort (India’s largest fort). We stayed at some amazing places, which we discovered driving by or on the internet. These include Orchha’s Bundelkhand Riverside, Jodhpur’s Ajit Bhavan, Gajner’s Palace Hotel, Sonmarg’s Ahsan Mountain Resort and Chittorgarh’s Padmini Haveli. We were the first guests at Minerva Hotel in Keylong, which was an interesting experience at Rs 1,200 a night. And we ate some exceptional food at roadside dhabas… and at the dhabas of Amritsar… and the thalis at Club Mahindra Jaisalmer, Gajner’s Palace Hotel, Jaipur’s LMB and Ahmedabad’s Agashiye… and delicious fresh trout at the Himalayan Trout Farm. We travelled in temperatures ranging from 45 degree centigrade to minus two. We also spent some time with small farmers and did not see the poverty that the media keeps writing about. These farmers are really happy people.

Our advice to you is it to do the same as we did – explore India by driving yourself. It is the best way to experience India and our changing infrastructure. My wife, Fiona, and I shared the driving and that helps a lot. Mihika pitched in occasionally. Seven thousand and eight hundred kilometres and one month later, we returned home. We never felt unsafe even once on this trip. We never had a problem finding a place to sleep at night. We met some amazing people and heard some amazing stories. This was clearly our best road trip ever. And it left us even more proud of our country, its diversity and its people. India is clearly changing for the better.

NArenra Jhaveri_BGOn Saturday morning, my friend and mentor passed away. I am on a family road trip currently where the telecom signals are not great. So, I learnt about Narendra J Jhaveri’s passing away only in the evening from his daughter, Manisha, who had tried to call me earlier in the day. I do not write obituaries, but in this case I had to do so because ‘Mr Jhaveri’, as most of us knew him as, was special. I got to know him in 2003, when Nasser Munjee (who was CEO of IDFC at that time) introduced me to him. I invited him to join the Investment Committee (IC) of our first fund at IDFC Private Equity and he was the longest serving IC member of IDFC Private Equity, right up till today when he breathed his last. I quit the IC in 2011 after leaving IDFC, but Mr Jhaveri carried on.

I remember him always being there when we needed his advice. He would come thoroughly prepared for every IC meeting and would read the entire book before the meeting. He would know what hot buttons to press and at the same time, would not want to belittle us by trying to poke holes in our arguments. He would never strongly push forth a point of view because he wanted us to feel that we were a part of the argument or decision. He taught us the importance of relationships and the importance of working with all parties to move forward. Darius Pandole, who partnered with me to start IDFC Private Equity, wrote to me on hearing the news, “I remember him vividly. He was so humble, knowledgeable and helpful, and a thorough gentleman.” Shyam Sundar, who was also a co-founder of IDFC PE, said he learnt a lot from him. Shyam first came into contact with him when Mr Jhaveri was executive chairman of ICICI Securities. Nimesh, the fourth musketeer of our team, said, “He was a good man.”

For those of you who did not know Mr Jhaveri, he was a long-time banker at ICICI and rose to be joint managing director. He started his career at the Reserve Bank of India after studying economics at the London School of Economics. He was a banker before bankers made a lot of money from bonuses and stock options. After retiring from banking, he served on the board of many prestigious companies, including Siemens, Indian Aluminium, Hindalco, National Securities & Depositories, Afcons, Voltas, Usha Martin, SKF, Pidilite and Edelweiss. Every large business house wanted him as an advisor. Mr Jhaveri was always keen on helping entrepreneurs grow, especially if they were young. I guess this kept him young also. And he was indeed young in spirit and attitude. I learnt from him how to use the iPad more effectively… how to read magazines and books on it. And how to do so in a cost-effective manner; after all, he would remark, “I am a Gujarati!”

Over the past 13 years, our families got to know each other well. Even after I left IDFC Private Equity I would still meet him regularly, invariably at the Grand Hyatt, on whose board he was. I will miss those meetings with him there. He was so proud of his kids and grand kids. Mr and Mrs Jhaveri loved to travel and they had a group of friends with whom they would travel all over. And he looked forward to his annual summers with his children and grand children.

He was a man of strong principles. When the government of Gujarat insisted that GoG companies contribute a part of their profits to schemes of the government, he quit the board of Gujarat State Petronet because he felt it was not in the interest of minority investors.

A few months ago, I realised I had not spoken to him for a while and called him up. He told me that he had been in hospital and sounded tired. A few weeks later, I went to Ahmedabad with a former colleague, Rupa Vora, to spend one morning with Mr and Mrs Jhaveri. We had a lovely time and a splendid lunch at their home. He took care to ensure that we returned home laden with delicious khakras.

But all of this is not why I am sitting up writing about Mr Jhaveri. Yes, he was a great man. Yes, I often ran to him for valuable advice. Yes, he was very smart. Yes, he was very modest. Yes, I learnt a lot from him. But the main reason I am writing this is because I never came across anyone who had a bad thing to say about him. That is why he stands out tall.

People in the financial world love to drag others down. I have had the good luck to be mentored by people who have been more illustrious than Mr Jhaveri. But there was always someone who would have some axe to grind, some criticism to make, some jealous comment to make. But not Mr Jhaveri. It is amazing that over the thirteen years that I have known him, everyone only had good things to say about him. This is how I will remember him… a good man, who was loved, respected and admired by everyone he came across. I am fortunate to have had him as a mentor.

Mr Jhaveri, rest in peace.

Luis Miranda
Luis Miranda connects dots. He started investing in India's infrastructure a long, long time ago. He started IDFC Private Equity and was earlier a part of the start-up team of HDFC Bank.

Luis has invested in and has been on the boards of companies like GMR Infrastructure, L&T Infrastructure, Delhi International Airport, Gujarat Pipavav Port, Gujarat State Petronet, and Manipal Global Education.

Luis today spends most of his time, together with his wife, on non-profits. He is Chairman of CORO and Centre for Civil Society and Managing Trustee for Nadathur Trust. Other organisations include 17000 Ft Foundation, SNEHA, Muktangan, Sunbird Trust and Samhita Social Ventures.

Luis graduated with an MBA from Chicago Booth and is a Chartered Accountant.
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July 17, 2016 11:28 am by M G Warrier
An excellent analysis. If everyone decided to accumulate wealth adequate for just next three generations and ploughed back the balance assets to society, povery will vanish from planet earth. Governments can help by deciding that no country will accumulate weapons more than what is adequate to destr...
July 16, 2016 13:56 pm by Luis Miranda
July 16, 2016 09:57 am by Luis
Himanshu, you clearly realised this many years back when you decided to quit the PE world. Keep up the great work, especially having the non-profit experience you picked up.
July 15, 2016 14:09 pm by Himanshu
Lovely post Luis. While I am back in the rat race, the break that I took has helped put things into perspective. Lucky to also have had the lunch opportunity where you presciently had said that I could possibly come back to a corporate job, wiser for my experience with NGOs! A line by Mahatma Gandhi...
July 15, 2016 12:42 pm by Brian
Nice one Luis