Transcript: Oil Shock, Debt, AI & The Future of Global Economy w/ Ruchir Sharma

These are the two worst performing states in the country.

And then you draw the contrast— you go to the south, we travel to Telangana, Karnataka, Tamil Nadu, it’s a totally different scene. And you can see that these things are rising up the rankings very quickly. Telangana, Karnataka, Tamil Nadu are among the 4 or 5 relatively rich states. And this is what strikes me about India, just the contrast.

In India, there are other countries we know about— for example, when we travel in America, the gap between the poorest state and the richest state in per capita income terms is about 2 to 3 times. Brazil, China, other countries, all similar, maybe 3 to 4 times. In India, the gap between a Bihar and Bengal, and a Telangana and Karnataka is 6 times in per capita income. So these are very different Indias, and it sort of brings upon the point that this is a country still of many Indias, it’s not one India.

The Conflict: Development vs. Political Competition

RUCHIR SHARMA: So I think it’s these observations that you pick up. And then also, you know, the conflict in our head. At one level, you see the poor development in Bengal and what’s happened, and you sort of feel sorry. On the other hand, you also have to admire how Mamata— Didi as they call her— is fighting this battle. She’s got so many forces against her, absolutely everything being thrown at her.

And also then you care about India. I think that even the BJP would privately admit that in any healthy democracy, you want political competition to remain alive. So I think that’s the conflict also— dealing with the biases in your head, which is the fact that on one hand, you look at the development, and as you saw, very little focus on development.

ANANT GOENKA: I mean, none, except for roads. I don’t think we saw any.

RUCHIR SHARMA: Yeah. And was it even striking to you that one of the last stops on our election trip was the very famous Presidency College in Kolkata, right? Such a great, well-known college that people think about. And we meet the young students there and they are still thinking in idealistic terms about how much they like communism, and spoke about that ideology. And I think one of our more right-wing people on the group commented, “You don’t eat ideology for breakfast.” But the whole idea was that’s there. So that’s the kind of stuff that you come away thinking about— the conflicts in your head, that you want political competition, and yet you see this level of development in Bengal, which is just heartbreaking.

Development and Elections: Does Growth Win Votes?

ANANT GOENKA: And that’s actually what I wanted to touch upon when I brought up, because these 4 states, 3 are opposition-ruled states.

RUCHIR SHARMA: Yeah.

ANANT GOENKA: And that, I think, is what kind of makes this interesting and fascinating. And at one point, especially in Bengal, you hear the intellectuals, you hear commentators, you hear global commentators kind of wanting TMC to make it, even though there’s been little to no development in the last 15 years. It’s a long time.

RUCHIR SHARMA: Yes.

ANANT GOENKA: So political competition, I guess people think, is more important than development. This is one kind of argument which we’re kind of discussing. The other piece is— is it the case that development can’t get you votes?

RUCHIR SHARMA: Yes, I think so. I mean, unfortunately, that’s the cynicism which I’ve got to learn in India. At best, development is one of the 6 or 7 factors which win you elections. And there’s a statistic that I had written about in my book, Democracy on the Road, at that time doing the research— that in India we looked at all states which have had elections for the last 30 to 40 years. And then we saw what is the average growth rate in states. And we typically found that for states which recorded an average growth rate of more than 8% a year over a 5-year term, the chances that the incumbent would get reelected in that state were 50%, which is a shocking number, right? Delivered 8% economic growth over 5 years, and you still— the chances of you getting reelected are no different than what they generally are, which is 50-50.

So the idea that you can fight an election on development per se in India— I think that theory was smashed, if I can say so, when Chandrababu Naidu lost the election in 2004. Now you can argue a lot of it was hype, right? And even he’s turned into something which is a much more blended model compared to what we used to have. So yeah, I’d say that it’s not as if development does not matter, but development is possibly one of the many factors which matter in elections in India.

And in Bengal, at least in this election, development was not on the table by either side. Because when we asked the BJP people why they aren’t talking more about development, their answer— as you know, even with the top leadership— was, “We want to first make sure that the people’s basic concerns about security are taken care of before we talk about development.” So we can criticize Mamata a lot about development, but the fact of the matter is that it just wasn’t an issue that we encountered in all our travels over 6 days.

Welfare Schemes: A Political Necessity

ANANT GOENKA: The other trend that we were talking about, that we saw on the trip, was just the amount of money being spent in terms of welfare schemes and promises of more welfare schemes— that’s almost become a has-to-do. Every state has to do that.

And I remember— I’m going to put Uday on the spot without asking him— but I was witness to a very interesting debate Uday and you were having on welfare. So how do you— I hope you don’t mind, Uday, I’m putting you on the spot here. But how do you process that? 34 election trips, we saw it in Bengal as well, Bihar. I remember in Andhra Pradesh, the number was touching ₹15,000 per family, as in some scheme or the other, ₹15,000 would kind of reach the family. In Bihar, I saw— I wasn’t traveling with you then— even ₹2,500 and there was gratitude. In Andhra, ₹15,000, there was entitlement for more. How do you see that playing out?

RUCHIR SHARMA: I’d say that you sound very cruel and brutal when you say that people shouldn’t be given handouts, because you see the poverty, you see what’s exactly happening out there. And my point is the fact that, fine, do handouts, whatever, you have to do.

And I think that the one interesting thing which has changed in India, which we must acknowledge, is that at least now when the politicians make the promises, the delivery is happening. The leakages have been stopped a lot because of digitization— that’s a big improvement in India. That the delivery now happens, that someone says we’re going to make it and it actually hits the final mile. That leakage is gone. The old Rajiv Gandhi sort of coinage that for every ₹1 only 15 paisa goes— I don’t know what that number now is, but it’s possibly well over—

ANANT GOENKA: 90 paisa to the rupee, yeah.

India’s Growth Model: Handouts vs. Infrastructure

RUCHIR SHARMA: I mean, maybe that’s too high, but it’s quite high in terms of what that number is. There’s no scientific thing about this. So that’s a huge improvement. So great. So you can do that.

But again, it’s the cynicism for me, which is that just before the election’s announced— and this is where I wonder what the Election Commission also does, which is that just before in Bihar we saw, or in other states, that just before the election is announced, this happens, right? So it’s not as if people are doing this with great generosity. It’s done to buy votes. Now you can argue that the person is benefiting because they’re getting the cash handout, but it is done with that cynicism. So let’s acknowledge this, that this is not some great generosity.

Now the second point which I make, and this comes more from an economic standpoint, is that when people ask me, or I get this question all the time, that why can’t India grow like China, why can’t India grow like Korea, Taiwan, all these East Asian miracle economies. They grew at 8, 9, 10%. China grew at 10, 11%. Let’s remember these countries. These countries followed a very brutal form of capitalism. In China, Korea, Taiwan, in these countries, they said no handouts until we reach a particular per capita income. We’re going to spend all the money we can on building infrastructure.

And for people who can’t— like in China, as we’ve discussed this, they fired 90 million people in their bloated state-owned enterprises in the 1990s, 90 million people. And they told people that if you can’t get a job, too bad, there is no support system. So all the people in China who were laid off decided that they have to move to the coastal areas. You got a huge migration which took place in China. They left all the inland areas, they moved to the coastal areas because that’s the part which was booming, which is the export zones and stuff.

And Korea, Taiwan, all these places— if you look at even these countries today, the government debt as a share of GDP, in their early stages of development, they made sure that the government’s role in terms of spending on handouts was very minimal. So you can’t have it both ways. Either you say that, listen, we are India, our polity is such that we have to settle for whatever growth rate we get. But don’t tell me then that we will do handouts and yet we want to grow at 9 or 10%. The two are not happening together because there’s no economic model in the world which has achieved both together.

So you can make a choice and you can say that, listen, I have a bleeding heart too, which is I want to give the handouts— do it, but then just make sure— and we saw it in Bihar when we were traveling. We were told by people that the road contractors and other people are not getting their payments anymore because so much money of the government has gone towards handouts.

Bengal, they have no revenue. What are they earning? They’re earning through real estate, some excise duties, but there’s no real revenue that the state has— there’s no industrialization, there’s no manufacturing. And that’s just not a priority. In fact, without citing someone, just to tell you about the mindset— we had a dinner in Bengal, and one of the top business people of this country once told me that he went to Mamata and spoke to her and said, “What is it that I can do for the state? What is it I would like to do in terms of industrialization?” She didn’t really know what to say. She didn’t have an answer. And then she said at the end, “You know what, I’d like you to build an art center.” Okay, if that’s the priority, then that’s what you’re going to get.

Foreign Capital and India’s AI Challenge

ANANT GOENKA: A lot of follow-ups here, but let me just come back to the main thing about this election. A few years ago when we spoke last, you mentioned that foreigners are wanting stable politics in India. Foreign capital wants stability— stability in government and stability in—

RUCHIR SHARMA: No, sorry, I mean, that wasn’t me, because if I could correct that, I never said that foreigners want that. I said that foreign capital— yeah, that’s what people like to say about stability and stuff. But in fact, all the research that I have done, and I’ve written about this, is that the maximum reforms that any government carries out is typically a new government coming into power in the first 6 to 18 months. So I’ve always said the best time to invest in a country is when the country is facing some sort of a crisis and then a new government comes to power, because that’s when you get the maximum amount of economic reforms and the political will is there to carry out those reforms. And the longer a government stays in power, the more diminishing the returns to power.

ANANT GOENKA: Is this wisdom right now, you think, one of the reasons foreign capital is leaving India? Are they looking for more competition in politics? Is that one?

RUCHIR SHARMA: No, I don’t think that’s the reason. I think as far as India is concerned— this is a good pivot— I’d say as far as India is concerned today, what’s happened is that the entire world today has a monomaniacal focus, which is AI. That’s all the world is about today, which is: which countries are the winners of AI, which countries are the losers of AI. Unfortunately for India, in contrast to what happened in the tech boom in ’99-2000, this time, as far as AI is concerned, most— I mean, foreigners have taken the view that India is a loser in the AI race. So that’s the view.

ANANT GOENKA: Do you agree with that view?

RUCHIR SHARMA: No. Just stepping back, why are people saying this? We are at the current stage of AI where the entire thing is about building the AI infrastructure— the picks and shovels, semiconductors, memory, the compute. That’s the phase. It’s a mad dash going on for that. India unfortunately just doesn’t have that, and this comes back to some structural weaknesses that we have had. And this is well known by now.

ANANT GOENKA: The government would take strong objection, and they did. In fact, the IT minister in Davos was posed the same question and he gave a very strong response. I don’t know how many people remember that.

RUCHIR SHARMA: The government can say whatever they want. I’m not saying this is right or wrong. I’m reflecting to you what the foreign investor sentiment on India is. Now you can say the foreign investor sentiment on India is wrong, that’s fine. But the numbers do the talking, right? So you can say whatever you want, but foreigners in the last couple of years just in the stock market have sold $50 billion. When your net FDI number is zero, it’s foreigners doing the talking. Now you can say foreigners don’t matter, foreigners are wrong, but you can’t argue with the data.

Now, my thing is: why are foreigners doing this? Because I, as someone who has invested in India and started my career in India, want nothing more than foreign capital to flood into India because it’s great for my business, it’s great for me. I feel very proud of talking about India when I’m out there. Today, as far as India is concerned, in my 30-year investing history, what I can tell you categorically is I’ve never seen such indifference towards India. As that old line goes, the opposite of love is not hate, it is indifference.

ANANT GOENKA: And so being ignored.

RUCHIR SHARMA: Yeah. So in 2013, when we had the Fragile Five, it was hate. People were really against it. Today it’s just indifference. You cannot chat about India because people just aren’t that interested in it. They are just focused on one thing for now, which is AI. And the fact of whether you have AI or you don’t have AI— in terms of the entire compute, the structure, the infrastructure for it. And here the structural weakness of India shows itself up.

We’ve spoken about the amount of money we spend on research and development in India as a share of GDP— again, it shows our priorities— is 0.6%. Korea and Taiwan, which have become the two biggest beneficiaries of the AI boom in the world today, and are on the cusp of being emerging or developed markets, they spend 4 to 5% of GDP on R&D. And then the number one country which spends the most on R&D—

ANANT GOENKA: US—

RUCHIR SHARMA: —is Israel. Israel is number one. The US too is about 3-odd percent, but it’s on such a large base. So if you’re going to spend that kind of money on R&D, then the bill will come due someday. And I think that’s what’s happened, which is that it was always said, for a long period of time, that our IT is just doing an arbitrage business. It’s not actually doing innovative stuff. And we lived with that. But today that is coming back to haunt us a bit because we don’t have any of that.

America’s AI Advantage and the Global Capital Shift

So that is the reflection today: the main reason foreign investment is not coming into India is because the entire focus is on AI. And that’s also something which is helping America continue to get away. I wrote a piece saying that America keeps bailing out Trump. Apart from the two popular topics— the war and the other thing— no discussion now gets over without Trump, right? And the whole issue that everyone asks is: how is America able to get away with all these things going on?

Everyone talks about the fact that America is doing this wrong and so on, but the bottom line is this: sitting here in India, when I travel in Singapore, all these investors— including housewives with Interactive Brokers accounts in Singapore— they love to bitch about America all day and then buy America all night. Which is the fact that all day they’ll do that, but all they’re going to put their money into is America, and most of it is into these tech AI plays and other things.

Because we are currently— I think this is an AI bubble, and we can speak about that later. But the fact of the matter is that as long as this massive focus on AI continues, America is able to get away, Trump is able to get away with a lot of his actions, just because he looks at it and says: my stock market is at an all-time high, my economy is growing at 2, 2.5%, what’s the problem? All these articles are written about America’s debt and America’s dollar and this and the other, yet foreign capital keeps rushing in. Just last year, about $1.6 trillion was invested in America. They look at those numbers and the whole thing is hinging on one thing, which is AI.

And India unfortunately is not seen to have any AI plays at this stage. This can change. We can get to a different phase of adoption, of having applications where India can end up becoming a beneficiary of AI. But the current reality is this: the 5-layer cake of AI—

ANANT GOENKA: —energy, the data centers, the chips, the applications, and the models. All 5, the government has put in as much support as possible. Private enterprises are involved, are investing also in them. So if you are saying that foreign capital is leaving India because they’re only interested in AI, they’ll be leaving every country, right? Why only India? Because there are only 3 or 4 countries that are actually playing the game on the front foot right now. So are we saying that therefore there’s concentration?

RUCHIR SHARMA: Absolutely correct, that the concentration is there. In the developed world, it is mainly about US. There’s something about Japan, and then in the emerging markets 2 countries have won this race in a huge way, which is Korea, Taiwan.

In fact, it’s winning it to a ridiculous way, which is, this is the Bombay Financial crowd, and some of you will know, and I never thought I’d live to see this day where one company of Taiwan, which is TSMC, their weight in the most popular index that everyone uses, the MSCI index, their weight is greater than all of India put together. Right, so it just tells you about the thing.

And then you look at Korean companies, Samsung, right, which has been around for a long period of time. It’s made a huge comeback because of its semiconductors and the memory and stuff, that the profits Samsung will make this year will be greater than every single American tech company except Nvidia, greater than Amazon, Apple, Alphabet, and all that.

ANANT GOENKA: So these companies are the customers for Samsung, right?

RUCHIR SHARMA: Yeah, yeah, exactly. So what’s happening is this: in America, there’s a mad rush on to win the arms race, right? So everyone’s got their own model. OpenAI is now in fact cracking in terms of their popularity. You have instead Anthropic, Gemini. These are the ones which are doing really well, but whatever it is, everyone is desperate for the fact that we have to win the AI arms race. And the biggest beneficiaries are the people who have that infrastructure to help them win the AI arms race. So those are the countries which are benefiting the most today.

I totally concede that this feels like bubble behavior when everyone is just running around. This feels like ’99 where everyone’s just running around to sort of get the thing. But unfortunately for us, in ’99 we benefited from the big tech boom there because there are IT services businesses and the TMT boom, some media companies, all those were there. We had those companies. So in fact, the Indian stock market had a huge surge in ’99-2000. This time, unfortunately, we don’t have that.

And now we are, in fact, among the financial crowd, we are being called the anti-AI play, which is that the moment this AI bubble ends then we are hoping that we will get some attention again.

ANANT GOENKA: So I didn’t realize it was that bad. So what? Domestic consumption, all the government spending that’s happening, all of that is counting for nothing for foreign investors at all at this point in time?

RUCHIR SHARMA: It’s not as if— I mean, I’m saying at this point in time, this is the reality. Now, I believe that this too shall pass, right? As we said that at some point in time, this mania can’t continue. You can’t have the entire global economy being run on one factor.

ANANT GOENKA: Correct.

RUCHIR SHARMA: That’s the sort of heady space that we currently are. But at this point in time, that’s what’s happened. The game has shifted, and this happens even in India when we would speak to politicians and we would tell them, even a year ago, that listen, the wind is shifting. When the tariff battle was going on and stuff, the attitude then, as you know, some of the senior people too was that we are a country of 140 crore people or whatever. Where else will people go? This is where the consumption is. This is where it is. Well, not really, at least not for now.

I think those stories will play out. They will come back. If you want to be a true contrarian, this could be a time to look at India and stuff. But that’s the view. The reality is what I’m talking about.

China’s Economic Challenges and the Dollar’s Dominance

ANANT GOENKA: What happens to China now? Let’s talk, let’s move to China a little bit, because 4 years ago, the Adda that we did, you, I think, had just started talking publicly about becoming bearish on China. 2 years ago, the Adda we did, China was flat. So your prediction, your forecast on China was right. Where are we with China right now? Because we’ve spoken about America, spoken about Taiwan and Korea, but China is the place.

RUCHIR SHARMA: It’s a bit mixed, you see, because as far as China is concerned, I think there are a couple of issues. One, I think that this is again— I keep going back to the point which sort of bothers me at some level as well, that why is Trump and why is America able to get away with everything that they are doing currently?

Because the war is going on in the Middle East, the biggest people were suffering. In America, where I sort of spend most of my time, the war is very much a TV war, right? It’s there happening on television and stuff. No one’s really feeling it on a daily basis. Some gasoline prices have gone up, but most of the product prices, whether it’s jet fuel or electricity, energy and stuff, they’re in surplus. It’s not happening. So the rest of the world is suffering the consequences of America.

And then my point is that one of the biggest problems is the fact that China is just not being able to step into that void. This should be like a golden moment for China, and it’s not being able to do that.

ANANT GOENKA: And I think it doesn’t want to. It’s saying it doesn’t want to be the global currency. It doesn’t want to still be a currency that’s an export-driven country.

RUCHIR SHARMA: So exactly. So that is the problem, right?

ANANT GOENKA: Which is that it’s not able to, doesn’t want to.

RUCHIR SHARMA: I think it’s not able to because we have never had this thing. If you look at the history, every 100 years we have seen a situation where some new power rises and that currency of that power assumes a much more significant role. This happened when America rose to overtake sterling. Before that, it was sterling rose to overtake the French currency. Before that, the French overtook from the Spanish. Before that, from the Dutch and all that. That sequence has gone on for 500-600 years.

This time what’s happened is that the financial hegemony of America has not only lasted so long but is disproportionately high. If you look at just in global transactions, the usage of the dollar, America’s share in the global economy is about 25 to 30%, but the dollar’s usage, if you look at transactions and all that, is close to 90%. The Chinese currency barely registers 2, 3, 4% or something, even though China’s economic size is 20%.

The issue is the fact that the Chinese growth model, the way they’ve built it up, is heavily being done on debt and heavily being done by pumping lots of money and liquidity into the system. So the fear the Chinese government lives with is that if we open up the country and we make the currency convertible, which is what will allow capital to go in and out, which is what you need for a currency to be globally accepted, you will end up getting a massive flood of money which will leave China.

So it’s the brittleness of the Chinese growth model which is being exposed here, which is why the Chinese currency is just not acceptable to global people, and which is why also that China is not being able to fill in the vacuum — which should be filled in by, you know, like a small country, which is my favorite country, I speak about — Switzerland. Look at that currency. Look at what you can do when you manage that and how people — I think that if you look at global FX reserves, people are more comfortable holding the Swiss currency than holding the Chinese currency. That just tells you all you need to know, right?

Because China’s growth model is so brittle, so debt-dependent, and so much liquidity, they can’t make their currency freely convertible. It’s not being able to pick up the void that the US is possibly leaving, and the US financial hegemony remains great. So therefore, the US can decide tomorrow, if you buy oil from Iran or Russia, we can sanction you, we can do this, because they have used their currency as a complete weapon, right, which no other country is able to do.

The US-Iran Conflict and the Global Energy Crisis

ANANT GOENKA: So China is buying more gold, apparently. The news from China always — we don’t really know beyond a point how accurate or not, but the sense we get is China is buying more gold, they’re buying foreign government bonds. And so given the behavior of China and that nexus between Russia, China, Iran, and North Korea that was building up before Trump, which is when Trump got elected — that alliance also seems to be kind of waning. Can we say that whatever madness or whatever chaos that is happening with the war in Iran, the US-backed war in Iran, the US is winning?

RUCHIR SHARMA: Well, that’s the paradox. So that is the paradox so far. I won’t say it’s winning, but I would say unfortunately it is losing less than the rest of the world. No one’s winning in this, but it is losing less, right? Because it’s not that dependent on the world for its energy needs. And it is at the heart of the AI mania just now. So the US is not feeling the impact of its actions and the rest of the world is suffering much greater consequences.

In Asia, in India, we speak about gas shortages, people going back to the villages because of what’s happening here with the restaurant business and stuff. But in places like Philippines, you can really feel the effect. And the longer this goes on, the worse it is going to be. So no one’s going to win with this. But the longer this lasts, the more the rest of the world ironically loses compared to the US. And that is the paradox of this entire situation.

ANANT GOENKA: But is Iran — I mean, there is a narrative that Iran actually is doing much better than it did before the war started. It’s the same family who’s controlling. They’ve got the Strait. So just if you go only in that one Iran-US conflict, do you believe there is a narrative that Iran also is doing much better than anybody expected?

RUCHIR SHARMA: Iran has been — I think there is the fact that they’ve been able to stand up much better than what people thought. But let’s not confuse that with success because the economy is a complete basket case, right? I mean, that economy is devastated. It’s not coming back, and they themselves said so, that it’s going to take years for them to develop.

But I think their reaction function is very different, which probably Trump or other people didn’t calculate. They have been off the economic map for a long period of time. So the fact that they’ll remain off the map for a longer period of time seems to be not something which is bothering them. Whereas I think for people like us, or even America, and even here in India and stuff, for us economics matters. But for them it doesn’t matter because it’s been a basket case for a long period, at least from an economic perspective, for a long period of time.

The Debt Crisis and the Risk of a Prolonged War

ANANT GOENKA: And you’ve written recently about this, that this energy crisis, if this war continues for a couple of weeks more or even a month more, it’s going to be very different from the last time because every country is operating on a lot of debt. You said China’s grown a lot of debt, even America has grown on a lot of debt in the last 5, 6 years. So just walk us through how, if this war continues, what kind of happens, how is it different from the last time?

Oil Prices, Global Debt, and the Crisis Spiral

RUCHIR SHARMA: Yeah, the world is short on a daily basis. I think the global production of oil is about 100 million barrels per day or something like that. And every single day we are short 5 to 7 million barrels a day that the war is going on. These are staggering numbers, right? We’re to be short this long. So if the war continues and the strait is not open, there’s only one way that the oil price is going. It’s going up. You need to reach $250 or something to be able to demand destroy, right? The only way that you clear it — if supply is going to be 5 to 7% on a daily basis is cut — the only way that you sort of do that is if you end up cutting demand in a huge way, right?

So that’s the thing. Now, in terms of the fact is that if this were to happen, obviously the effect is going to be felt every single place. The point I was making, which is what you’re referring to earlier, in my FT columns that I had written, was that the world today has entered this in a very different space, which is that we have record levels of debt and countries are running very high deficit levels. Like the US is running a 6% budget deficit.

Normally what happens is that when you enter a crisis, you generally sort of, especially after you’ve had a long expansion, you have a buffer. This time there is no buffer. And we can see that in terms of long-term interest rates. So in the last — it’s been exactly now 2 months since this escalation started, right? In these 2 months, interest rates everywhere have gone up. The magnitude has varied, UK being among the worst, US — even the US, yeah, the 10-year interest rate is up about 40 basis points or so.

Normally in a crisis, what happens is interest rates tend to come down because there’s a rush to safety. This time the big difference is that interest rates have gone up despite some sense of a crisis, and markets have gone up in most countries. But markets have gone up mainly — again, it’s mainly the AI-driven markets. But in the last few days, at least Europe, India, many Asian markets have started to slip right back. There was a rush up and down on optimism that this is going to end. But as this is dragging on, the markets are beginning to fade.

ANANT GOENKA: Okay.

RUCHIR SHARMA: So this is a very short-term thing. But long-term interest rates, if you look at it, those have been stuck and sticky ever since the conflict began. Those really haven’t come back down compared to where the crisis was. So that is telling you something, which is that concerns are growing that you don’t have enough money and that you’re going to keep coming to the market for more and more borrowing.

So the ability for governments to try and calm the situation by giving handouts, more stimulus, is quite limited. Even in India, the 10-year has gone up since the year began, especially since the conflict. So the ability for us to be able to withstand higher oil prices by the government giving handouts is very limited this time. That’s the point that I was making. And it seems like we’re going there, right?

What Happens If Oil Stays Above $120–$130?

ANANT GOENKA: So what happens, Ruchir, if oil stays at above $120, $130 a barrel? What happens? I mean, are we talking global recession? Are we talking everybody suffers but America will still be fine. Is that —

RUCHIR SHARMA: No, even America will suffer, but it’s a relative game that Europe and Asia will suffer more. And so therefore, I think that this is where I feel the lack of responsibility, especially from Europe again, right? Which is that America created this problem. That’s their argument.

ANANT GOENKA: Correct.

RUCHIR SHARMA: Fair enough. America created this problem, but it’s impacting you.

ANANT GOENKA: Yeah.

RUCHIR SHARMA: So I just wish these countries would take much greater initiative. What should they do in terms of whether it’s coming together to put more pressure on Iran or wherever it is, even America, to try and open that strait? Because the fact of the matter is, it’s hurting them the most.

China, for example, did something pretty smart here, which is that they built up massive amounts of reserve — just in terms of when prices were low, they bought massive amounts of oil. So their reserves are among the highest of any country that I know. So they’re able to withstand this a bit better, but I still feel it’s complacency. At the end of the day, they’ll have to come back and buy it back at some point.

And this is what I think the analogy to use is — just having been a wildlife safari person — we see in the jungle there’s the king of the jungle, and now we have the law of the jungle. The only way that you survive among the so-called less powerful animals in the jungle is if you move in a herd. If you’re going to move alone, you’re going to be picked.

And that’s what Trump has also done very smartly. Last year, I remember I’d get phone calls from the Indonesian, Philippine governments when Trump came, “What should we do? Trump is coming, tariffs and stuff.” I said, at least have a coordinated strategy with each other, because if you deal in a coordinated way, then there’s something that you can do about tariffs. Instead, if you go individually deal with the US, you’re always going to be on the losing side, because that’s the king of the jungle, right? So they’re going to eat you for lunch and breakfast if you do it individually. Come together, and then all of a sudden the might is greater.

So similarly, on this oil stuff, I think that the powers — whether it’s India, may not be that up there just now, but Europe, China — they need to have a greater sense of urgency that we need to see this end, rather than saying America created this problem, let America sort it out. No, every single day that this lasts, for whatever reason between America and Iran, the biggest casualties are countries in Europe and Asia.

India’s Challenges: Energy, AI, and Capital

ANANT GOENKA: And I just wonder if they — I just feel they all believe that there’s nothing they can do because of what happened in Russia. They all felt like they were completely helpless and they had no voice in that. But let’s come to India. You think India is playing its cards well?

RUCHIR SHARMA: There’s nothing which India can do at this stage, right? The way that I think about India — and I guess I said this, unfortunately for India at this point in time — it’s that Shakespeare line which I had sort of spoken about, that “when sorrows come, they come not in single spies but in battalions,” right? So it’s just all accumulating together.

Because we first had to deal with the fraying of relations with America, with the tariffs going up, which hurt. Then we end up getting this AI mania, and we are seen to be on the wrong side of the AI. Then we end up having the whole Iran conflict, right? Because we are a big energy importer.

The countries which are doing relatively better in this — if you look at the world today, it’s divided mainly between AI winners and AI losers. And the other division which has happened the last 2 months is countries which are energy exporters and countries which are big energy importers, right? So Latin America, for example, they’re holding up well because most countries there tend to be energy exporters. But not true of countries in Asia, many of them in there.

And now we also end up getting stuff like the El Niño, which is being spoken about as a factor. So it just seems like a lot of things, unfortunately for us, have come together.

Now, people say, what can you do in this environment? Well, firstly, there’s not much you can do because even if you think that you’re building all this AI capability and stuff, for it to actually come through will take a while. It’s not going to just happen immediately that you switch it on.

What the government can do at present is to think much more about how do you get foreign capital back into the country. Maybe you need to cut taxes, what incentives do you give, how do you get foreign — because at the end of the day we do have some great companies, we do have some great investment stuff. But I wish the government would think about that as passionately as they think about winning elections, right? Because that’s what I would like to see — that, okay, we have to really figure out how do we get this foreign capital back in here, rather than the idea that, oh, eventually, where else will it go? It has to come here.

Private CapEx and the Difficulty of Doing Business in India

ANANT GOENKA: Domestic capital has been something of a concern also. The amount of domestic capital being deployed in India is something of a concern. Publicly, government has been talking about it for years. I mean, almost like 5, 6 years I’ve been hearing this rhetoric. Why do you think that’s not happening?

RUCHIR SHARMA: We’ve discussed this in the past. I think the two things here, right, which is one is the fact that for some reason businesses still feel that — so what you’re referring to is private CapEx, that private CapEx is taking a long time, it’s just not picking up. Because as I said, it’s still a very difficult place to do business on the ground, whether it’s the regulatory framework that we have, it’s the investigative agencies, or the entire daily toll that you deal with. It’s a very difficult place to do business on the ground. So I think that’s the reason.

ANANT GOENKA: That’s the main reason why you think that?

RUCHIR SHARMA: I think that’s the only reason I can think about, because taxes have been cut, interest rates were lowered. So that’s the only thing which I can think about.

Now, having said that, I want to — I’ve seen India much too long, and I don’t want to get too bearish also on India because it’s a country that consistently disappoints the optimists and the pessimists. That’s always been my line about India. 2 years ago, it seemed as if a lot was going right for us. It was disappointing the pessimists — the stock market kept going up and it seemed like this was the only country —

ANANT GOENKA: It was the most expensive stock market in the world when we had the show last year.

RUCHIR SHARMA: That’s right, 2 years ago. And that was a note of caution I sounded then, that listen, all these guys are putting money in this market, but it was all being led by domestic investors. Foreign investors even then were hardly there. The domestic investors were doing that, but they were buying the most expensive stocks in the world.

And now 2 years later, unfortunately, the market hasn’t done well, but it still ranks as the second most expensive market in the world, or maybe third now with US, America, and maybe Taiwan’s got in there now. So we were that expensive to begin with. So that’s part of it.

ANANT GOENKA: And China is one of the cheapest amongst the biggest.

RUCHIR SHARMA: China has always been cheap, right? One thing I figured about China — and we discussed this internally with my team and staff — is that it’s very hard to make money in that country. It’s very hard.

ANANT GOENKA: So you wouldn’t bet on China even now?

Rapid Fire Round

RUCHIR SHARMA: Yeah, I’m saying that maybe selectively, but it’s very hard to make money in that country, because of the fact that they’re— in fact, they’re almost the opposite. They over-invest. So as an investor, they don’t care about your returns. They like over-invest out there. So I remember one of my colleagues, he’s probably here. He went to China recently and he was all dazzled. We were all dazzled because of the technology. And you look at the number of EVs on the road and stuff. But then we looked at that sector and I think that the conclusion was that as far as competitive intensity is concerned, this is like Beirut. It’s just so competitive that everyone’s killing each other. So that’s the problem there. Now you can argue that’s a different model. But it’s so competitive, there’s so much investment which they do in any sector that they like, that as an investor to make money in China is very difficult.

ANANT GOENKA: Okay, I’m going to go to rapid fire, Ruchir, then we get some super audience here, we’ll get the audience questions. But I was going to sit over there, I think, so my— can you just pass my rapid fire questions? There, that note, right? Okay, let me clear it.

RUCHIR SHARMA: If I’d seen this earlier, I would have been prepared, right?

ANANT GOENKA: Where’s the fun in that? Okay, so you know rapid fire, so have fun with it. Ruchir, you have $1 million today to invest. Where would you put it in a rapid fire way?

RUCHIR SHARMA: I’d say that the world today is such that you begin with America and figure out how much money you put in America, and then you figure out the rest of the world in terms of where you put.

ANANT GOENKA: Okay.

RUCHIR SHARMA: So I still feel, it’s a very basic asset allocation question that we deal with all the time, that we typically put 60% in equities, in global equities, 20% in what we call inflation hedges, and 20% in deflation hedges. And let me just, for the audience, illuminate that a bit. Which is that the worst returns in the next few years, it seems, is going to be from bonds, fixed income.

ANANT GOENKA: The worst returns.

RUCHIR SHARMA: Yeah, because I feel that especially bonds, because government bonds— because these things are absolute, because the governments are going to keep spending until they run into a crisis, right? So that’s what you put— you put the least that you need to put to earn your interest, and you keep it going. But so the normal thing was to put 60/40, used to be the normal model— 60% equities, 40% bonds. We all grew up with that conventional thinking. I think that we have broken it up, that you put 20% only in bonds and fixed income, and 20% instead in what we call inflation-protected securities, and in gold, commodities, and other things which will all do well in an inflationary environment. So I’m generally looking for some sort of— in the fact that fixed income is unlikely to do that well, inflation is going to pick up, so you should do that. So that’s the rough split that I want to give you.

De-globalization and Which Countries Stand to Gain

ANANT GOENKA: Perfect. De-globalization, re-globalization, whatever you call what’s happening right now, which country do you think stands to gain the most? It’s still betting on America.

RUCHIR SHARMA: No, I mean, I feel that America has, in terms of the fact that there are all sorts of debt problems and issues, and today it’s doing well, but I just feel that the countries which will do well in the next will be some of the middle powers which are able to negotiate this. Currently, it’s a very difficult situation because until this energy crisis subsides, some of these middle powers are getting very badly hurt, right? But I feel that a once-in-a-lifetime opportunity is coming to invest in some of these. In fact, I wrote a piece as well on this, that you can do whatever AI, but some of the quality stocks in the world— and I define quality as stocks which are very good brands, trading at cheap valuations— those are the stocks which will do very well. And the countries which have those stocks, those investments will do very well. So I don’t have a country in mind at present, but I have a whole basket of stocks which I think are these quality stocks which will do very well in the next few years.

ANANT GOENKA: And they’re not too expensive right now.

RUCHIR SHARMA: They’re cheap historically, at least especially outside the US.

The Future of Indian IT, Gold, and Billionaires

ANANT GOENKA: Okay, super. You’ve done a lot of forecasting, so I’m going to try to ask you to just forecast. I’ll give a topic and you tell us in short what you think the future of this is. The future of Indian IT companies?

RUCHIR SHARMA: I think that they’ll be there, but in terms of the fact that the big ones have an opportunity to maybe reinvent themselves, I think they’ll be there. But currently I have no money there because I just feel that it’s— to use a colleague’s term— it’s like Beirut. So I don’t have any capital today in that cohort.

ANANT GOENKA: Okay. Future of gold.

RUCHIR SHARMA: Again, I’ve always liked gold. We have spoken about gold in the past. Problem is that it’s become everyone’s favorite for a while, right? And I’m naturally not inclined to buy more when everyone is saying the same thing. So I think gold should be there in your portfolios. I would recommend like 4-5% of your overall portfolio should be in gold or something like that, but I would not put more than that at this stage of the cycle.

ANANT GOENKA: And gold is gold, not silver, not copper, aluminum, none of that.

RUCHIR SHARMA: Those are separate. I think that you should have commodities in general.

ANANT GOENKA: Okay.

RUCHIR SHARMA: Because I think that this is a friendly environment for commodities.

ANANT GOENKA: So gold, 4-5% concentration.

RUCHIR SHARMA: Yes, yes.

ANANT GOENKA: Fine. What do you see the future of India’s billionaires today? The people who are billionaires in India today?

RUCHIR SHARMA: The healthy thing about any country should be churn. What I would like to see in India for capitalism to truly work— and this is a part we discussed when my previous book came out— a fundamental problem with capitalism is when there’s not churn. What I would like to see is new and new billionaires rising, and we have seen that. So I’d say that the odds are greater to bet on new and upcoming billionaires than to side too much with the existing. I think churn is going to be the key thing if India is going to truly prosper.

Private Credit, Indian Stock Market, and the AI Race

ANANT GOENKA: Okay, the future of private credit— bleak, because it seems to be bubble category also.

RUCHIR SHARMA: No, I mean, it’s here to stay, and the regulators wanted some risk to move out of the banking system and move to the private credit. Now again, which country are you talking about? In America, what happened was there’s been a lot of private credit lending but it hasn’t been stress tested. And I know lots of naive people have bought into this logic, very naive, that we’re getting 10-12%, what’s the problem? Yeah, but that 10-12% hasn’t been tested, which is that when you get a down cycle, some of that is going to go to zero, right? I’d say that India may be a bit better because we haven’t had such a private credit cycle, but at least in America I feel the future of private credit, private equity is quite bleak.

ANANT GOENKA: Okay. In the Indian stock market, Ruchir, in COVID there were 5 crore Demat holders, now there are 18 crores. So a lot of people here have never seen a downside. So where do you see the future of the Indian stock market overall?

RUCHIR SHARMA: I think that given the fact that I still expect India’s nominal GDP, as we think about it, to grow at about 10%— 6% GDP growth, 4% inflation— unless this AI is really going to come and kill India’s growth story forever, which I don’t think— I still feel that the stock market here will give you decent returns. But remember that it’s long periods of feast and famine, and I’ve lived through this, right? I started my professional career in India as a kid back in ’94. And between ’94 and 2003, the stock market went nowhere. And then from 2003, of course, it took off. So it’s entirely possible for the market to go through long periods where the market does nothing, and we have to be prepared for that. If you have the patience to be prepared for that, I think that the fact that you’re a growing economy, 10% nominal GDP growth, means that over a 5-10 year time period, generally the market will do okay. But we’re coming off being the most expensive market in the world, so we’re just washing away some of that excess valuation just now.

ANANT GOENKA: Okay. What’s the future of the Anthropic-Gemini-OpenAI fight?

RUCHIR SHARMA: I think that OpenAI is clearly sort of cracking.

ANANT GOENKA: Okay.

RUCHIR SHARMA: And I think that this is a very important question. I know I’m supposed to be in rapid fire, but I need to say this to you, which is a very important investing lesson that I think I’ve learned over time. Which is this— if you look at every single technological revolution in history, what’s very clear is that the incumbents rarely win. That’s the thing about AI that people don’t realize. If you looked at back in 2000, except Microsoft, all the big stars of 2000— the internet revolution was real, it stayed, but all the big winners of that revolution basically died. In fact, I think that Intel just hit the same stock price it was 25 years ago. It just hit that stock price yesterday. So that’s the point, which is that in any of these big tech revolutions, you get a massive amount of overinvestment, which is great for the consumer, right? So the fact that all these guys are doing all this is fantastic, but very few of them are going to actually make money.

ANANT GOENKA: Okay.

RUCHIR SHARMA: So I again would not put any money into these because I think the competitive intensity is great. I think that already OpenAI is approaching as the first sort of crack in this. But that’s the whole thing about technology, that you’re just going to keep getting churned. So big believer in AI as a technology, but in every tech revolution, the incumbent very rarely makes money.

ANANT GOENKA: But I think the incumbents have read your column, right? Because they have bet big on these guys. So Google has bet on Gemini, and Microsoft on OpenAI. And they’ve not even won— they spread their risk, they bet on several AI. Even then you think incumbents are going to have a hard time?

RUCHIR SHARMA: I’m saying that that’s the history. Now they’ve figured out— they’re smarter than I am— they figured out who’s going to win. Fair enough. I’m saying for the general crowd, just remember one lesson, which is that incumbents— now remember, back in 2000, Cisco was the smartest company in the world, right? But it’s not as if they invested in lots of companies and all that. Samsung was even back in 2000 a great company and stuff, but then it took 20 years after that for Samsung to reach the same stock price. So these things, that’s just the way it functions.

ANANT GOENKA: The future of the BJP—

The BJP’s Political Dominance in India

RUCHIR SHARMA: I think that the lesson that we learned was that the BJP has shown much greater staying power than we had expected because of the fact that when Modi suffered a setback in 2024. I think a lot of talk was on how the BJP would— I mean, if you look at the forecast, and first a lot of people missed the fact that the 2024 election was going to go like the way it did, and some of us were luckily, at least, spot on on that.

But after that, a lot of people started to extrapolate that how it’s going to lose one state after another. And I think that what we saw there was that how the organisation really kicked in, and they were able to win those state elections after that, right? So this is here to stay.

But this is what I always grapple with, the big dilemma as far as India is concerned. And it just strikes me, which is what makes the BJP so powerful, that if you look at the politics of India, on the right, there is no competition. Anybody who has a right-wing ideology has one party, right? On the other side, there’s so much competition, and that vote gets split.

Even the so-called Muslim vote— that fine, in every state someone sort of has the Muslim vote. In Bengal, it’s with Mamata, but even there, she is fighting the insurgents, like someone like in AISF, AIIMM. They’re all there, they’re all like nibbling away. The BJP has no competition.

So that’s what I think really makes the politics of this country what it is and what makes the BJP so dominant. They have no competition on the right. On the other side, everyone’s got so much competition with each other, and even very dominant parties are dealing with— the BJP doesn’t even have a small right-wing party, right?

And I think this is something we need to reflect upon, because this is what’s causing this very sort of one-party kind of nation, which is that one party is dominant, because anyone who believes in that goes that side. On the other side, because their vote share, even at the peak, the combined vote share of the entire grouping put together, or the BJP alone, is like never more than 50%. But they have no competition. On the other side, the 60-70%, whatever you want to talk about it, it’s like split all over the place.

The Future of the Indian National Congress

ANANT GOENKA: Yeah, fair. So what’s the future of the INC, the Indian National Congress?

RUCHIR SHARMA: It’s the same question which can be asked all the time. And I think that as far as they are concerned, it’s going to be the same, which is that they’re going to keep fighting with the regional parties for space. I think that’s just the way it is.

So in fact, I said this to you before this election, that the most interesting election will be in UP, which is next year. Not because I expect— even though Akhilesh, I think, it’s great fun chatting with him. I’m not sure if he’s going to even come close to winning. But he’s a great guy. Because of the fact that the entire succession thing will start after that election. So that’s what makes that succession to the Prime Minister.

In terms of at least the talk will start, right, that in 2029, who is it? We don’t know what his mind is, but at least that thing will start. So the real interest in Indian politics, almost regardless of what happens on the 4th of May when the results come out, is going to be there because at least there’ll be some competitive dynamic within the BJP after that election.

The Future of the US Dollar

ANANT GOENKA: Interesting. Okay, very interesting. Future US dollar, here to stay, waning a bit?

RUCHIR SHARMA: I think that the natural path of the dollar is down because it’s very interesting that despite everything, the AI, everything happening, the dollar has been stable.

ANANT GOENKA: Now you can—

RUCHIR SHARMA: Both the bulls and bears can make their own case. The bulls can say, hey, despite all these people who keep saying negative dollar, the dollar remains stable. The bears can say that even though the US is getting $1.6 trillion in capital, and even though all this happened, the dollar not being able to appreciate, it’s basically been stuck for the last year, it’s been completely stuck.

So I think that the dollar is there, but I feel that the dollar slide will take place, but it’s a lot slower than what it should be given the fundamentals of the current account, the fiscal, because there’s no alternative which has emerged as a very big— and the weakness of the Chinese currency that we alluded to. So it’s here to stay. But I see that over time, people are looking for ways on how not to be that dependent on one currency in the world.

Reacting to Headlines: Tata Group, UAE and OPEC

ANANT GOENKA: Okay, so react to the following news headlines: the divide in the Tata Group at Bombay House, the divide in the boardroom battle at Tata Group.

RUCHIR SHARMA: That’s like a tough question because these are people I know very well there. I don’t have any insight.

ANANT GOENKA: How does foreign capital look at that when a company the size of Tata has this kind of—

RUCHIR SHARMA: I don’t think I’m seeing that as a discussion point. As I said, foreign capital first needs to look at India first, and then we can look at something within that.

ANANT GOENKA: Okay. There is news of UAE pulling out of OPEC. How do you react to that?

RUCHIR SHARMA: I think that in terms of the fact that that region is— we’re seeing much more differences crop up. The one battle which has been going on there is between UAE and Saudi. Right, that was a big factor even in the UAE asking Pakistan to give our money back. So I think that we’re seeing fragmentation happen in the region. I think that a lot of countries are realizing that we have to look after our interests here. And so this cooperation I think is freeing because of that.

Ambani, Adani, Tata, Birla — Who’s the Safer Bet?

ANANT GOENKA: Okay, Ambani, Adani, Tata, Birla, the foreign investor, who’s a safer bet?

RUCHIR SHARMA: As I keep telling you, first let foreign investors come back to India.

ANANT GOENKA: Okay, so for domestic investors, safer bet?

RUCHIR SHARMA: I don’t think— in terms of the fact that these are— as investors, you have to invest in a company, not in the overall thing. So each one has some asset which appears quite remarkable in terms of what the asset they have, and they’ll remain. But I don’t think that there is a foreign investor sitting there thinking that we’re going to put money in X conglomerate versus Y. In fact, they’re looking at companies. Foreign investors generally don’t like investing at a conglomerate level. They like investing at individual companies because conglomerates usually trade at discounts.

Trust in Institutions: Big Tech vs. US Government

ANANT GOENKA: Okay. Meta, Google, Apple, US Congress, or the Office of the President— which of these institutions do the US citizens trust more today?

RUCHIR SHARMA: Well, the polls are there, right, that it’s a race to the bottom. In fact, someone says so, which is that— but this is what the US is— that the only people with lower popularity than Trump is the Democrat Party, right? So that’s just the reality. So it’s a race to the bottom. And big tech— but I think that obviously in terms of if people have to work somewhere, they still rather work for a big tech company than work for the US government.

RBI Governor vs. SEBI Chair: Who Has the Tougher Job?

ANANT GOENKA: Okay, who has a tougher job in India today? And I asked you this question last time as well. I wonder if your answer has changed. The RBI governor, the SEBI chair?

RUCHIR SHARMA: I think the RBI governor at this stage.

ANANT GOENKA: This stage?

RUCHIR SHARMA: Yeah, because I think that you’re dealing with a big hole that you have to fill every day.

10 Minutes with the PM

ANANT GOENKA: Okay, you’ve got 10 minutes with the PM. One—

RUCHIR SHARMA: This is a question I’ve answered ever since.

ANANT GOENKA: But the world has changed now. The world has changed now.

RUCHIR SHARMA: I’m never going to— it doesn’t matter.

ANANT GOENKA: No, one advice and one question.

RUCHIR SHARMA: No, I mean, again, I find it very presumptuous on my part to give someone advice.

ANANT GOENKA: I tried. I know even last time I didn’t get an answer.

RUCHIR SHARMA: Yeah, because I feel that there’s no value because there’s no one who listens to you. And you can sound very self-important by saying all this, but they don’t really care.

34 Years of Driving Through India

ANANT GOENKA: Okay, you’ve been driving through India for 34 years. React quickly to the following trends, how they have changed or not changed. Quality of roads.

RUCHIR SHARMA: So this is a very interesting question. I’ve always said this, that I started—

ANANT GOENKA: I thought Bengal was different from the trend, that’s why I’m asking.

RUCHIR SHARMA: No, it’s not, because here’s the rule of travel that I’ve done. I wrote this book Democracy on the Road. I wrote about this little anecdote there that as kids we used to go to my mother’s hometown called Bijnor, which is 200 kilometers from Delhi. Right, used to be a single lane sort of road as kids, right? I’m talking back in the 1980s and stuff, single road like stuff. The time it would take to go from my home in Delhi, let’s say, or to drive from Delhi, I mean, only that you could do like a drive from Delhi to Bijnor, 200 kilometers, used to be about 4 hours unless there was some breakdown on the way. 4 hours.

Today the time is still 4 hours. The roads look great for a while, but point to point, it’s the same, because the last few miles on both spots is so crowded, and even when you go along the road, the encroachments and stuff. Even in Bengal, we travel every state. Sure, for a while, someone will talk about some new expressway is open, it’ll take us 3 hours, Delhi-Dehradun is this and all that. You wait for a while.

The rule of travel for 34 years of election travel, or my 50 years as a human being, is in India, every time you account for 50 kilometers an hour point to point. Okay, that’s the average, hasn’t changed in 50 years.

The Transparency of the Indian Voter

ANANT GOENKA: Okay. The transparency of the voter, do you feel that they are less open to sharing their political views with you today than they were 34 years ago or 10 years ago?

RUCHIR SHARMA: We’ve done this exercise so often now. Every time you ask a voter which way they are voting, they will smile, almost as if you’ve asked them how was your sex life or something, you know, they will smile. And then you’ll ask them the fact that who are you voting for? Their answer will be— so the art we’ve learned over time is that most of the time, unless they’re a hardcore activist and someone from the party, they’re not going to reveal their vote preference very easily.

They need to start asking questions. Then they will pretend that they, you know, and then they’ll say that— then you try and decipher from their answers what it is. But the transparency is very clear. They consider their vote to be very precious.

And in Bengal, this is going to be one of the big issues. As you know, when we started driving down south, especially after we left Murshidabad, people were just not telling us who are you voting for? People would just laugh and shake their head this way and go, and then you ask them who’s going to win the election, and the favourite dialogue everyone will say was, even when there’s a landslide going on.

Bengal: The Biggest Threat to Mamata

ANANT GOENKA: Okay, only on Bengal, what do you think is the biggest threat to Mamata’s chances of winning?

RUCHIR SHARMA: Anti-incumbency. Yeah, the fact that she’s been in power for 15 years, the state is still there in a state of disrepair. So I think that it catches up. And this is so interesting. Again, I want to go back to the original question we asked. We sitting in Bombay are viewing this election in a very different way. There are people here who are pro-BJP and they want the BJP to continue being on the ascendant, and Bengal is a big frontier to conquer. Then there are people who don’t like the BJP, they want Mamata to win because they want the political competition in the country to remain alive.

ANANT GOENKA: Correct.

RUCHIR SHARMA: There they’re thinking it in very different local terms. They’re not thinking in these ideological terms and stuff like that. Each person’s thinking about the fact that what is in it for me. And we were surprised, right? Because even people at the Presidency College and other places, even places where you thought that these people would surely be against the BJP and they would be much more pro, let’s say, the TMC and stuff, the fact that they’re even considering the BJP tells you about the fact that how they think much more local in terms of what they are. We here sitting in Bombay or Delhi, we are looking at this election from our ideological lens. So that’s one thing we have to be careful about.

ANANT GOENKA: Sure. Okay, thanks so much, Ruchir, for playing and being kind of a sport. I think you dodged a fair number this time, more than last time.

RUCHIR SHARMA: I want to know who answers more frankly when all these actors call you, so you let me know.

Audience Q&A

ANANT GOENKA: Okay, so we get some audience questions. Guys, show of hands please, wherever we’ve got. Yeah, Mr. Nanda first. I’m going to put a few people on the spot. Go ahead.

AUDIENCE: I can understand, with my limited knowledge, that EU doesn’t want to resist or fight with America. Why aren’t the EU going stopping Israel, right? Because Israel has a very small economy.

RUCHIR SHARMA: Yes. No, I’d say that because Israel’s in alliance with the US. So I don’t think that they have any pressure from the EU. And I don’t see that the EU has put any pressure on Israel. But today, Israel will do what America is going to ask them to do. Now, you can argue all the reportage may have shown the other way around. No, no, it was the other way around at the start. I don’t think it’s the situation today. So that’s my reading, that it started off with him selling on the plan that they’ll be able to do a surgical thing, this will be all very quick and over and lead to a regime change, as the reportage goes. Today I think it’s very different, I don’t think that that situation is today, maybe I’m wrong, but that’s my reading.

ANANT GOENKA: Nandita Das first please, got a few questions. Putting you on the spot.

On Crypto and FDI

AUDIENCE: Thank you, thank you for coming and it was a very enjoyable session. So my question is, I would like to know about your take on crypto, whether it is going to be a mainstream investment tool in the future. And as an investor, what portion of my investment should go to crypto as of now?

RUCHIR SHARMA: I think that I’ve always said that crypto is here to stay. So it’s definitely here to stay. Again, there’s competition there, Bitcoin or whatever, but I still felt that gold was better than crypto, was my sort of analysis. So I’d say it’s part of that alternative 20% bucket that I spoke about in my 100% allocation. So it depends on your comfort level, how much on crypto. I personally don’t have any crypto in there, just because I’ve been chasing the price. But given the fact that it’s corrected and seems to be stabilizing, if you want to put a bit in crypto, I think that’s fine. But I personally, I mean, I’m a believer more in commodities as the alternative. That’s just my personal belief, but crypto is definitely here to stay.

That’s a pretty big number, but I know that the younger you are, the more crypto you want. So I think you’ve revealed your age.

AUDIENCE: India acts best when there is a crisis. So what do you think we should be doing to sprint ahead in terms of getting FDI?

RUCHIR SHARMA: No, but getting FDI, Harsh, is a very long process, right? As I said, let’s start by getting, because I just feel that we need to hear frankly as to what FDI we need to get in today. But I’d say that the idea, I think the only way to do that is for state chief ministers to be out there much more actively, because at the end of the day, I think we speak a lot about what the central government should do, what Modi should do. As you well know when you’ve traveled, the state chief ministers have a lot of power. We need to get them also to sort of get much more involved in doing that. And they’re doing it. I mean, they show up in Davos, they show up in other places. It’s all about how do you improve the situation at the ground and where the central government has to control things like taxation and stuff.

You can’t have a situation where you’re the only country in the world which still does retro taxation. You still talk about that. That feeling still remains in people’s minds, which is the fact that these laws can be changed at any point in time. And the fact that if you look at our capital gains or other stuff, that’s not FDI, but in general for foreign capital, we are still higher than the rest of the world. So it’s very simple that if you want to get some of that, you need to cut that down. Otherwise, the state chief ministers need to play a much greater role as well in sort of making sure that the projects at their local level happen, because at the end of the day they are the ones who can enable that more than even the central government.

ANANT GOENKA: Mr. Mishra. Yeah, yeah, give me a question here.

On Rate Cuts and Emerging Market Flows

AUDIENCE: All right, so with the upcoming midterm elections in the US and all the talk about rate cuts, what do you think will be the impact in terms of flows to emerging markets, and where is India positioned for that?

RUCHIR SHARMA: As I said, today I think the scope for rate cuts in America today is close to zero. I don’t expect rate cuts to happen as far as America is concerned because inflation has been quite sticky. It’s at 3%, the underlying. The headline will be closer to 4% as the gasoline prices stay up there. And the Fed has missed its inflation target for 5 years in a row, every month. So it’s running behind on credibility a lot. So I don’t expect rate cuts to happen.

Flows today are all being driven, as I said at the start of the show, by AI. So I’d say that the flows are all about that. So until the AI bubble bursts, which will happen when interest rates actually go up— if interest rates go down by any chance, you’ll see even more flows go to AI. So I’d say that is a very important construct, which is that once the AI bubble bursts, and people begin to look at how all this settles, it’s okay. But as long as— if interest rates by any chance go down, I’d say that even more flows will go into AI.

ANANT GOENKA: Putting you there on the spot, then I’ll go to the back.

Development vs. Dole

AUDIENCE: Since you clearly stated your intent to put me on the spot, I don’t put me on the spot, but I would just say what you said in the beginning. Ruchir and I have had a running difference on development versus dole.

ANANT GOENKA: Right.

AUDIENCE: But the point that I have always made is that elections are about, sorry, politics is about winning elections. And when politicians have realized that development doesn’t get you elected, then there is no case for doing any development. It was always about winning elections. At least development used to be a good slogan. People have found a more material slogan which the voters like, and politicians want— if you find it efficient, just transfer the money. So now the new slogan in an election or in politics is, who can give me more?

And of course, now the controversial part— I do believe that the model of development, no matter how many roads you build, no matter how many airports you build, and you do develop India’s own foundation model for AI, all of that is great, but there’s a large population whose lives these things do not touch. And if you want their votes— everybody has one vote. This room doesn’t go to vote most of the time. Those people turn out to vote in droves. For their vote, you need to give them ₹5,000. So that’s the model. That’s the real political model in this country.

RUCHIR SHARMA: But I agree with you, so there’s no disagreement. As I said, therefore we’ll never grow at 8, 9, 10%. That’s it.

AUDIENCE: Yeah, because growing at 8, 9%, as you said yourself, for 5 years doesn’t get you reelected. So why should I, incentives are not aligned for development. Incentives are aligned for doles and populism.

ANANT GOENKA: Yeah. Anand, the better, smarter Anand.

China’s Manufacturing Dominance and India’s Challenge

AUDIENCE: So you spoke about China not playing by the rules. They have low ROCs in their business, they have free land, lending at very low costs, and they’ve become the next— they are the manufacturing powerhouse of the world. They say the next China will be China itself. So to that extent, how do countries like India compete in this unfair environment? In a way, can we ever come up? Should there be more protection by the world against Chinese products? What’s the solution?

One more question. You didn’t answer what you saw in Bengal in terms of who’s coming to power, BJP or TMC. So what are you seeing there?

RUCHIR SHARMA: Okay, so the first question on China, I totally agree with you, which is that it is very unusual for a country at that stage of development to be such an export powerhouse. Generally they graduate. You export your way to prosperity, you get to a particular per capita income level, and then you graduate.

But the problem in China is this, that they have an ambitious growth target of 4 to 5%, which given their declining population, shrinking population growth, is just not feasible. So therefore they have decided that we’re just going to do what it takes. So I agree with you that the rules are unfair, and this is where the rest of the world needs to do more to be able to counter that China stuff.

And this is where America again has got it, but because last year again, and even now, so much of the focus is— it gets shifted to what America is doing, that China on this front is able to almost get by. So on one level, on the financial side, as I said, it’s not able to capitalize on the US weaknesses. On the other hand, because the focus is on the US, on the manufacturing other side, it’s able to get away with stuff which is hurting the rest of the world. I travel to Southeast Asia, Indonesia, Thailand, they’re getting hollowed out by the Chinese export surpluses.

Bengal Election Analysis

So that’s there. The second question, I think I answered that as far as Bengal is concerned, that it is compared to what we had gone into, it was a closer election than we expected. And as I said so on record, which is that you see, we are traveling. When, as travelers, we can end up seeing waves sometimes. I mean, we have done 34 election trips. I have a track record of, apart from who is winning, what a group’s general thought has been. When there is a wave, you are generally able to do it. But to expect us to be pollsters, given the poor track record of pollsters to start with, is very difficult.

So in this election, we thought that the gap is going to definitely close. There’s a 10 percentage point gap in the last election. The gap is going to close for the reasons we discussed. Whether that gap can close enough to flip the government is very difficult for us to say, particularly because then we have the data dancing in our head that to close a 10 percentage point gap is a very big deal. It’s almost like you need a wave to do that. So there’s anti-incumbency, but whether that can close a 10 percentage point gap is something we totally struggle with.

We sit at the end— it’s confidential— we sit at the end and we do our forecasts. It’s a very religious exercise. Everyone does it at the end. And this time I kept thinking that whatever number I gave, if I gave the opposite, maybe that would have been better. So it’s a close election. I think other states, the picture is somewhat clearer.

But for Bihar, for whatever it’s worth, we were on record. We came back, I gave an interview, said that this is a wave that we are seeing after the 2024 election. I came back, wrote that there is no Modi wave, what are people talking about, which led to a lot of ridicule at that point in time.

But sometimes you get elections. I remember 2016, we traveled in Tamil Nadu. There was more than a 10 percentage point gap between Jayalalithaa and the DMK. We knew that gap’s going to collapse because in Tamil Nadu every 5 years the government would switch. Guess what? The gap collapsed. Guess what? Jayalalithaa still got reelected because the conversion of votes into seats in India can be so complex.

ANANT GOENKA: Give the mic to— yeah, please go ahead.

America’s Ideological Shift Under Trump

AUDIENCE: Since American politics affects the world so much, we’ve seen a major ideological change in America in the last— since Trump came to power. Post-Trump, where do you see ideology with respect to economic policy and geopolitics? Where does America go? Where do you see America going there?

RUCHIR SHARMA: No, the ideology is here to stay. Which is the fact that that is gone, that’s shifted. There are certain shifts which are permanent. So the fact that JD Vance and other people who are likely inheritors of that legacy, that’s here to stay. So I think that let’s distinguish between Trump the personality and the ideology. The core ideology, which is anti-immigration, much more inward-looking— that I think as far as economics is concerned at least, the anti-China, all that’s I think there to stay. So that is going to outlast Trump.

AUDIENCE: So do you think there was an ideological change at the corporate level, meaning the protectionism, isolationism, was it always there, or has it been sort of not— that’s a change.

RUCHIR SHARMA: These are cycles we go through. America has gone through many such cycles. So for example, between the two wars, the interwar period, America was very protectionist, very anti-immigration. Then you had a wave of globalization which happened in the ’80s and ’90s, which led to America being such an open country, people flooding in, etc. Now the wave is going the other way. It started off about 10, 12 years ago, but even then I remember writing back in 2016 when Trump first came that that wave has now subsided.

So I think that these are waves which come and go, but for the foreseeable future, it’s very hard to see America going back to the America we want it to be. We want the America of the 1990s, the 2000s. That’s not coming back. Thank you.

Political Polarization in America

ANANT GOENKA: But the polarization between the Democrats and Republicans in society, that’s also going to widen, right? Because you see popularity that started with that, what’s her name, AOC.

RUCHIR SHARMA: Yeah. And now to Mamdani, the polarization has been happening for a long time. It seems to have now become— we have reached the limit.

ANANT GOENKA: Yes.

RUCHIR SHARMA: Because today— let me tell you, this is the best evidence of polarization in America as to how extreme it is. The economy, if you look at it, the underlying economy between 2024 and now, hasn’t really changed that much— growth rates, unemployment, inflation. If you look at the consumer confidence numbers, everything broadly, all the economic metrics in America are roughly the same today compared to they were before Trump, just before Trump came to power.

Here’s the difference. Overall number same. In 2024, if you asked how many Democrats thought the economy was in good shape when Biden was there, a lot of people— a majority of Democrats thought the economy was in great shape. The Republicans thought the economy is absolutely smashed. Nothing has changed. Here we are today. Most Republicans think the economy is in great shape. Most Democrats think that the economy is a complete hellhole, so to speak. So that’s just the polarization. It’s not based on facts. The facts haven’t changed. America’s economy today and 2 years ago was identical, or nearly identical.

ANANT GOENKA: Okay, okay. I think Nilesh Shah here. I don’t want to miss you. I didn’t see him walk in, but…

NRI Ghar Wapsi: Will Indians Return from America?

AUDIENCE: Thanks, Ruchir, for great insights. Very recently, Sridhar Vembu of Zoho made an appeal to NRI Indians for ghar wapsi, saying that in the US you will get squeezed between hard right and woke left and time to come back to India. Do you think that kind of appeal will have any relevance for ghar wapsi?

RUCHIR SHARMA: Unfortunately, people think much more from their pocketbook rather than political ideology anywhere. Even in America, I remember when Trump first came to power, a lot of people said, “We’re going to move to Canada,” and “We’re going to do this.” Nobody really moved to Canada. So I think that people don’t really move due to political ideology.

But I think that what— there is an opportunity which I do see if we can capitalize on it. A lot of Indians I know in America are sort of feeling a bit angsty about putting too much capital there, thinking that, what if— and they would like to have something in India. So I think that capital can move a bit more freely if we can provide the right incentive structures to them. But for people to uproot themselves and move because of political ideology, I mean, there’s no real evidence of that.

ANANT GOENKA: Can I just get some women affirmative action here? Yes, please get the mic. A couple of the second row there. Yeah, please go ahead.

The Dollar’s Future and Global Coordination

AUDIENCE: Hi. I was just thinking about what you said about the dollar and there being absolutely no other currency that can take over. So what would be the reason when the rest of the world will get together like it did in Bretton Woods, so many years ago, to get together and start really looking for another currency or a coin or a crypto coin, or a bancor kind of thing that Keynes thought of at that time?

RUCHIR SHARMA: No, there’s no— as I said, it’ll happen gradually, that the dollar’s role will decline. But generally, the biggest shortcoming of the world today— it’s not just the currency, it’s the Iran war, it’s the tariffs— is the lack of complete coordination between different powers. That for me is the single biggest tragedy of the global economy today, and the global polity. Just no coordination. And I don’t see that changing. I’m not seeing that urgency. I was hoping that the Iran war— I’m not seeing that urgency come through.

So the dollar too, it’s happening bit by bit. The dollar share in global FX reserves are declining, but I don’t see any urgency of people coming together on that front. I just want to say, on tariffs, Iran, these are more immediate issues. The dollar will happen over time.

ANANT GOENKA: You pass the mic to your right, please. Good.

AUDIENCE: You spoke about many countries, you know, Taiwan, Korea, even Switzerland.

France: Strengths and the Problem of Big Government

One country that doesn’t get spoken about a lot, which actually is doing, I think, fairly okay, is a country that has a significant number of AI startups, defense, manufacturing, consumer goods, and tourism— France. What’s your take on this country?

RUCHIR SHARMA: No, no, France is a poster child of what went wrong with capitalism. The fundamental problem in France has strengths, right? But I’d say that the description of Europe which fits France to the T is that it’s an open-air museum. So that’s been the description. In terms of think that there is value in Europe, there are some companies which are cheap and can do okay. France has some strengths, but there’s one problem in France which tells you about everything that you want to know about France.

The share of government in France, government spending as a share of GDP, is nearly 60%. Six-zero. Nearly. That’s almost second to after North Korea. When you have a government of that size, that bloated, it is very difficult to get stuff done. So yeah, there’s a lot of talent there. Best luxury brands, best place to holiday. And some of these startup stuff. But unfortunately, the government’s role there is so intrusive that it’s very difficult for that country to truly flower.

The UK Under Starmer

ANANT GOENKA: Since it’s a summer vacation time and she’s gone to France, let me just— few, just a few minutes on UK because we didn’t talk, we didn’t touch on UK at all. Starmer’s approval rating is apparently one of the worst in the world, in the history of political leaders in the world.

RUCHIR SHARMA: Every leader they elect, their rating goes down the tube. I don’t know if it’s a function of the country or it’s a function of the leader. I mean, how can it be that every leader you elect, you want to turf them out of office after 6 months in power?

ANANT GOENKA: Right. And London is a city people keep talking about— London is just not like the vibrant— so just on UK, I mean, what’s your view of the future of UK?

India’s Manufacturing Gap & The Path Forward

RUCHIR SHARMA: I don’t know if I mentioned this earlier, but I remember that in 2016, the Brexit vote had just happened, and by coincidence and bad luck, my book was just released then. So I was doing some interview there. I was going to talk about my book, global book, but you go to UK, you go to London, and you’re on the side and stuff, and the first question they ask is, yeah, your book is fine, but what about Brexit in UK, another line for them which just came to me on the spot, that UK may not be the most important country in the world, but it’s the most self-important. So, I would hate to say it, that despite my roots and loyalty and my columnist status with the FT, but it really doesn’t matter. So it’s not something which— I mean, I know that we like it because London is the Mussoorie of India. Yeah, so that’s great, but beyond that it’s fine.

ANANT GOENKA: It’s the capital of Vilayat, no? Rashi said— Rasesh bhai, I didn’t see you make a comment. Rasesh bhai? Yeah, two more.

AUDIENCE: Hi, Ruchir. Always exciting to hear you. One of the grapples that has been there of late, especially with AI and the software exports growth may come down— India has had for the last 20 years, energy imports have been going up and now oil price going up, it will go up, but we had the offsetting coming from the software exports.

If these software exports are not going to grow and the energy imports are going to grow, we’ll need some other export engine of size, not small here and there. Do you have any thoughts on what that could be?

RUCHIR SHARMA: Well, I mean, we have seen some success here, we have seen some success on the OEM side, auto side, it has to come from manufacturing. Otherwise, that’s the only thing. And I think we have seen some manufacturing success stories, just not big enough.

But for something to bridge that gap, it still has to come from that side. Whether at some point in time we can adopt AI to improve efficiencies and do that, the only path to prosperity for countries around the world is still if you export manufacturing, which is what Vietnam is still doing, very successfully and stuff. So if it happens, I think it has to happen through that sector still, because otherwise I think that you’re right, that some of this other stuff, at best it’s a holding operation.

ANANT GOENKA: Is there that one reform that needs to happen? Because government has been publicly saying 25% of GDP is the aspiration for manufacturing sector. We are stuck at, I think, 14 or 15%.

RUCHIR SHARMA: Forever.

ANANT GOENKA: Forever. We’ve been stuck there for like— so is it that one thing? No, I think it can’t be one.

RUCHIR SHARMA: As I said, at the end of the day, first, the first step to a cure, as they say, is to admit the problem, right? But if our entire problem is ease of doing business— I mean, if our entire sort of thing is going to always be the fact that if you say anything negative, you are like anti-national, you’re not, like in terms of you’re only portraying the bad stuff, so therefore people just clamp down. No one says anything, right? Because people just clamp down in that environment. So, how do you get feedback from people? But if people just clamp down, who’s going to give them feedback? I mean, who has the guts to do that?

ANANT GOENKA: Okay. Yes, yes.

Real Estate, Housing & Investment

AUDIENCE: Thank you. I’m Dr. Jayashree Patil Dake, and I am a faculty of economics in KPB Hinduja College of Commerce. Now, my question is quite close to everybody’s heart, is housing. Real estate, because when it comes to investments, the real estate, and we see that prices are skyrocketing. So how do you look at it? I mean, is it— when is the right time?

RUCHIR SHARMA: Never there is a right time. There’s never a right time. But as I said that, yeah, I mean, depends what you want it for. If you wanted to live, it’s always the right time. If you want to invest, you’re much better off investing over time, like in the market, then in like real estate, and real estate people who have made money have generally done it by other rich guys who can buy land banks, not people who can necessarily buy apartments. So I think that that’s been the general history of investing and the returns that we have seen over time.

ANANT GOENKA: But the real estate sector, you’ve said that the American economy, at one point you had a real estate, it became over— it hurt the economy because it became so expensive. Same thing happened in China, became a bubble with the more— so real estate and the economy have some—

RUCHIR SHARMA: Absolutely. I mean, real estate bubbles are the worst kind because, when those crashes happen, they hurt people and it’s very hard to clean them up. I don’t think we are anywhere in that sort of concern I have for India at all. We are not in any real estate bubble or something.

ANANT GOENKA: Yeah, choose a last question, you pick.

RUCHIR SHARMA: No, no, I mean, I can’t.

ANANT GOENKA: Okay, I think let’s take two from there then. AaRti and Mr. Shah, yeah.

Europe, the Dollar & Global Power Shifts

AUDIENCE: Let’s stay with France for a moment, Europe. Europe has now in some sense, all of them have got slapped around by Trump and their egos have been bruised and they are now— and the umbrella, the security umbrella has sort of been removed from Europe and they are now going to be spending whatever, $750 billion on that. Do you think Europe can get its act together? Because together they are the second largest economy in the world. And could they slowly start sort of at least moving away from the dollar and creating that alternative that people were talking about?

RUCHIR SHARMA: No, I think that in theory, yes. And in fact, last year I was getting optimistic on Europe because of the fact that Germany, the biggest power there, was in crisis. And as we all see here, I think that countries only reform when they’re in crisis. This is not true of India, this is true of most countries around the world. And Europe, they was feeling an existential crisis, but now once again with this energy crisis, it’s really set them back again because there’s so much still dependent. And they had in fact gone to America for more of their energy needs over time with what happened in Russia.

So I’d say that generally yes, but unfortunately in this crisis and this inaction that we spoke about in Europe, the passive way that they’ve dealt with it, I think, is not helping their cause at this stage. But the potential is obviously there because people still— one thing that China will always lack, that at the end of the day, nobody wants to go and live in China, nobody wants that currency. Compared to Europe, people still want to go there, people still want that currency at some level, but they have no economic dynamism.

So how do you improve economic dynamism? The Draghi report came out, which was something which listed it out. There’s both good and bad news there. The bad news, I think, is that by most estimates, not even 15-20% of the recommendations in the Draghi report have been implemented. The good news is at least they’re implementing something. So yeah, so I think that’s where it is, but it’s not really sort of, as I said, doing its bit this year as this crisis has rolled on or taking any leadership of the kind which would be inspiring to the rest of the world.

ANANT GOENKA: Aarti, go ahead.

AUDIENCE: Hi, always fascinating. I have 100 questions, but I’ll ask you 3. 3? This is the last one. Musk and Bezos. Bezos has come back. They are not talked about as incumbents. Are they the dark horses? Because Grok, it has the best AI out there today, and Bezos has come back to work and is building.

So because you look at the US, you’re not looking at India. What are your views on those two? If you look at India, right, RJ always said, ghar pe khaana hai toh bahar ki ho jaye. Are you in the long-term, long India? Would you tell your FDIs, come back, in the long term you will make money here? Third, from a security point of view for India, now that Trump has Pakistan in its back pocket, is that something we need to watch? Like, how does that play out in the long term for India?

India’s Long-Term Outlook & the Pakistan Question

RUCHIR SHARMA: Okay, so let’s answer one by one if I can. One, I’m not sure I’ve seen any study showing Grok to be the best of the stuff. In fact, the biggest success in the last few months, if I can say, has been Anthropic. And followed by Claude, right? Those have been the two real things. Grok is still struggling from what I can make out. So it’s not there. So that’s the thing. I still treat them as incumbents and I’ve not seen any great thing there.

The second question is, as far as India is concerned, of course, but I think it’s a question of understanding that I would always have capital in India. Because my heart lies here. I believe in this country. I believe that we will go through cycles. So this is a tough cycle we’re going through, but I do believe that we’ll eventually come out of this. So I still feel confident about that.

And the third thing is that this Pakistan stuff, I think that this is where I feel that I wish India would be a bit more broad-minded, right? Which is the fact that as far as Pakistan is concerned, we got really carried away last year when, the Sindoor happened. We have to go, we have to do this. We didn’t quite think about the entire strategic consequences that action would have. It clearly has had a lot of repercussions and stuff, and even now we have to realize that, I just feel that some of this is such churlish behavior, which is that I understand that Pakistan can do what they want, but sitting in America, it was almost pathetic to see the way people here, including especially the media, were rooting for the ceasefire to fail because Pakistan was involved in it.

Can we start thinking about our self-interest? Our self-interest is to make sure that damn ceasefire holds, that even if Pakistan facilitates that, that it holds. But yet we— so we have to rise above this. And I remember writing this column like when I first started, one of my earliest columns I wrote 30 years ago was that, and it’s on record, it’s still there, which is that can we start getting obsessed with China rather than Pakistan? It would lift our game.

ANANT GOENKA: But just a little pushback, don’t put all media in the same bucket.

RUCHIR SHARMA: No, no. Listen, as you well know, I’m a fan and I come here and I do this with you, but I would never appear in any of those kind of places where they were just sitting there. It was just sad to see.

ANANT GOENKA: Yeah, yeah, you can say it.

RUCHIR SHARMA: No, no, no, no, I mean, everybody— you know it, they are friends. I mean, in terms of— no, they’re not friends, but everybody knows the whole thing. But you know what exactly we’re talking about, that we need that, we need big-minded thinking.

ANANT GOENKA: No, but I’ll just, and I’ll end with this, our neighborhood and our relationship with our neighborhood. We discussed this a little bit, and it would be interesting to get your perspective. Does it make a difference to our economy? Does it not matter? Does it make a difference to how, again, how foreign people think about India? I know that right now it’s all AI, but even from a larger perspective?

Trade With Neighbors: The Key to Economic Success

RUCHIR SHARMA: Absolutely. In fact, one of the first things I’ve said, and I think that Modi tried that, Prime Minister Modi tried that when he first came to power. Every single successful economic model in the world, if you look at it, has happened when you trade more with your neighbors, without exception. India’s intra-regional trade in the subcontinent’s intra-regional trade is the lowest in the world. The only place where it’s lower is Africa. Every single successful region in the world, whether it was Eastern Europe, East Asia, the number one key to economic success is how much you trade with your neighbors.

ANANT GOENKA: Interesting. So that’s the advice you can give to the Prime Minister, I guess.

RUCHIR SHARMA: Doesn’t matter.

ANANT GOENKA: Okay, Ruchir, thank you so much for a very interesting evening as always.

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