Interview with the Big Bull: Rakesh Jhunjhunwala talks about Modi, elections, his big bets and banking sector
KV Prasad Jun 13, 2022, 06:35 AM IST (Published)
Listen to the Article (6 Minutes)
Summary
When Rakesh Jhunjhunwala says something, the market sits up in rapt attention.
Jhunjhunwala, often dubbed as India’s Warren Buffett, made his billions from equity investments, and his stock picks are closely tracked by India’s retail and institutional investors.
In a wide-ranging interview with Shereen Bhan, Jhunjhunwala talks about what excites him, Prime Minister Narendra Modi, the approaching general elections, his Rs 2,500-crore bet on Star Health Insurance, and the stressed banking sector, among a raft of other topics.
When Rakesh Jhunjhunwala says something, the market sits up in rapt attention.
Jhunjhunwala, often dubbed as India’s Warren Buffett, made his billions from equity investments, and his stock picks are closely tracked by India’s retail and institutional investors.
Watch the full interview here.
It is not for nothing that Jhunjhunwala, an investor who runs his own asset management company called Rare Enterprises, is known as the Big Bull.
In a wide-ranging interview with Shereen Bhan, Jhunjhunwala talks about what excites him, Prime Minister Narendra Modi, the approaching general elections, his Rs 2,500-crore bet on Star Health Insurance, and the stressed banking sector, among a raft of other topics.
Edited excerpts:
I think it was around the same time last year that we had our last conversation. Let me ask you, what excites Rakesh Jhunjhunwala today and this takes me back to some comments that you made in February. I think it was on the sidelines of an investor conference that you were attending and you said that today the dilemma in the market is that technically the market is not prepared to go down. We have got the highest price earnings in history and we are at the lowest level of profits to gross domestic product (GDP). But despite that, you said that you will continue to put your money into equities, so what excites you today?
I feel personally that market had a tremendous rise. We bottomed in August 2013, around 5,200 or 4,800 and you had the Nifty went up about 11,000-11,300. We are now correcting and if you look at the long rise that we have had, I would say, it’s a very poor correction. I believe that bull market cannot end at these level of profits to GDP.
I think the capital investment cycle has just started. In 2003-2002, investment to GDP was about 27 percent, savings were about 28-29 percent. By 2008, both were about 37-38 percent. So you have a level, where percentage of profits to GDP is at one of the lowest levels, the investment cycle is just starting. I think this flow of local money into markets – it’s just the beginning, abhi to khali trailer aaya hai. I don’t think this flow is going to stop.
The index may have lost maybe 10 percent or 7-8 percent, but there has been tremendous correction in the midcap stocks. I don’t think that political uncertainty is going to let this market go down beyond a point. Also, the effects of Insolvency and Bankruptcy Code (IBC), the Goods and Services Tax (GST), the aim to make toilets, the Jan Dhan Scheme, opening of bank account, digitalisation of the economy – it is all a process.
I think with every passing day, the benefits of these things to the Indian economy will go up. So, I personally feel that we are in a correction – we had a rise for nearly four years. If the market remains in the range of 10,000 to 11,000 for the next one year, I would feel happy. But then, the market has to make and lay a ground for the next tremendous rise.
So you are saying that 2017 was the year of extraordinary gains and 2018 is likely to be a year of consolidation?
Absolutely.
That is your expectation at this point in time. Several things that you spoke of, let me pick up on each one of those individually and let me start by asking you about politics, because you said, political uncertainty is only going to weigh so much and not further as far as the market sentiment is concerned. What is the mood in the market with respect to what is happening on the politics front?
I don’t know what is the mood in the market, I know what I feel. I personally feel it’s too early to predict an election, which is going to take place in 11 months. In the history of all democracies, bypolls, by and large always go against the ruling party. So, I think too much is being made of the fact that the BJP has lost the bypolls. The fact remains that Prime Minister Narendra Modi is the most towering leader of this country as of today and I think in a range of 1 to 10, if he is 9, the second person is 3. So, you will fight this central elections on the basis of an electable prime minister. I do not think the Congress or the opposition parties got a credible leader as a prime minister.
Having said that, the fact is that the BJP did extremely well in the Hindi cow belt and to repeat that kind of performance may be difficult. However, I am pretty sure myself, in all my calculations that the next government is going to be a BJP government and it’s not going to be a khichdi government.
All these khichdi people – see how they fight in Karnataka. They all come together to share power as actual sharing of power is easy. So, I predict that we are going to have a next BJP government despite what people feel.
Second thing, India is not dependent on any single political party. In 2004, the index was 6,400, when BJP lost it was 4,600, then it went to be 25,000. In 2009, when the Congress got 210 seats, you had 20-20 percent rise in the Nifty for two days and for the whole five years, market went nowhere. So I am not so much worried about this politics. Market always has some reason to speculate and it’s too early a call, and my call is we are going to have a BJP government.
That is as far as politics is concerned, when we talked to you about flows, that was something that you have alluded to as well and while you are right that the domestic institutional investors continue to put in money into India between 2013, when domestic institutional investors (DII)were not pumping in money, they were net sellers to now. But Rs 81,495 crore in 2017 to about Rs 58,000 crore in 2018 so far. It is a different picture, if you look at what is happening as far as foreign institutional investors (FII) is concerned and it’s not just with India, we are seeing this emerging market outflow at this point in time about $3.5 billion out of the emerging market exchange-traded fund (ETF), how is that going to play out?
I think, the local influence is going to be far greater than the foreign influence. The major amount of foreign money is company specific. Lot of people have invested in HDFC, HDFC Bank, TCS, so I don’t think that has got anything to do with India, it has got to do with Indian companies. So, I feel that the flow of the local money first of all will be far better than the foreign outflow and at the moment, India’s macros are much better than the other emerging markets.
I think oil prices today has reached $74/bbl Brent, Indian basket is at $70/bbl, I think it’s going to come to $69-70/bbl and at these levels, India’s macros will be very good.
The rupee?
The rupee will be at these levels, maybe a rupee here or there. I don’t see rupee going to 75-76 to the dollar and there is no reason why it should. We have $400 billion of reserves and we are the most investible country. We have never had any defaults, our track record is tremendous compared to other emerging markets and our levels of debt are nothing as compared to China. So on all those parameters, I think India is doing well and will do well.
Always remember, Marc Faber, one of the gurus of emerging markets, he always said one thing, the locals know best.
You believe that the locals will continue to put in money?
What are the alternatives? Today first – the local money got delayed in India because people lost a lot of money not because market went down, but because of scams and they lost money in 2008 because of the financial crisis worldwide.
I don’t see anything on the horizon now. I think with the regulation that the market now has, the kind of illegalities of the wrong is today one percent of what it used to be. It is there, it is not eliminated totally and I also feel that the locals – today if you get 15-18 percent returns, which is better than any other asset, the ease with which it can be invested and the cost at which it can be invested.
Don’t forget one thing, India by 2025 will save a trillion dollar a year and I am saying 30 percent of that will come. So, I think both the amount of savings and the percent of savings coming into markets, both debt and equity is going to go up, I have no doubt about it.
I will pick up on the midcap point also that you raised. What do you expect now, we have already seen a fair degree of correction as far as midcaps are concerned, how much more pain do you anticipate there given where we are.
I cannot generalise the midcaps. It has to be company specific. There are midcaps, which I think there is opportunity and there are midcaps even today which I think are hopelessly overpriced. So, there has been a correction and we cannot paint everything with the same brush, but I would be careful in buying any midcap.
You would be careful in buying any midcap.
Like, I would be careful in buying any stock.
Let me start asking you about what has been a consistent bet for you and that is pharma. We have seen a revival as far as pharma index is concerned, it’s up about 15 percent still off its highs. Do you believe that the worst is behind us when it comes to pharma, does this sector now inspire confidence?
I am pretty sure the worst is behind us. The problem was the US generic competition and the fact that there were all kind of threats that the government will impose to control price in India and the third was the currency. If you see 2017-2018 or 2016-2017, everybody’s realisation in foreign country was 4-5 percent lower than the previous year. This year, it will be 5 percent higher than what it was last year.
I think the generic competition in US is leveling off now. The Indian pharmaceutical branded generic industry is a fast-moving consumer goods (FMCG) and whatever government may say, unless they make a mechanism by which they inspect the quality of plant that make the medicines, how can you generalise it. Will you take a medicine from a plant, which you don’t know whether it has followed quality or not and that is growing at 15 percent a year and there the earnings before interest, taxes, depreciation, and amortization (EBITDA) margins are 20-25 percent, the return on equity (RoE) are 40-60 percent.
I think for the pharmaceutical industry worst is very much behind it. Now, the Indian pharmaceutical industry is entering a unknown, risky, but exciting phase, where companies like Sun Pharmaceutical, Lupin, and others are going into specialty generics. Even if one of the medicines succeeds, it could be a game changer.
So does this inspire fresh competition, a renewed competition in you as far as pharma sector is concerned?
I was always an investor and I am confident they will do well.
Would look at adding more pharma to your portfolio?
That I don’t know what I will do.
Let me talk to you about banks and you have been betting on the likes of Karur Vysya Bank, Federal Bank, perhaps even ICICI Bank more recently – what is the story as far as banks are concerned – how do you see the private sector banks versus the public sector banks, the public sector undertakings (PSU) banks losing market share – what is the bet?
I have a very simple theory. Firstly, India had subpar credit growth in the last two to three years. However, if India has to grow 12 percent nominal, let us say 7-8 percent growth, 4-5 percent inflation, there is nowhere in the world that credit growth can be less than 1.25-1.5 times nominal GDP growth. Suppose 1.25 times is nominal GDP, so we are going to have 15 percent credit growth. 70 percent of the markets growth is only going to be 5 percent, which is the public sector that means the balance 30 will have a growth of 10 percent that is 30 percent of the present base. So the opportunity to grow is unbelievable. You cannot create the banks tomorrow.
Then you come to banks which are in trouble. Most of the bad debts were related to corporate lending prior to 2013. You play your innings one-two-three-four-five-six years, somewhere it will come to an end.
Second, if you look at the peak provisioning profits, once the provisioning normalises, the profits will just go through the roof. So, the return on assets will go up, consequently, the valuations will go up. So not only we will be benefit from enhanced earnings, we will also benefit from enhanced valuation. So, I think banking today, especially good banks who have legacy problems are very attractive investments and I have investments and I am an interested party.
There are people who were concerned- rightly or wrongly, I don’t know. When you were on the Federal Bank conference call, you seemed to have signed off by saying god bless and people were interpreting that to mean that you were signing off altogether?
Not at all. I don’t know why people are interpreting all that. I has a habit, I always says ‘god bless’. They had some write offs in the fourth quarter, so I was saying ‘god bless’ and we do not have these write offs in the future quarter and I personally feel provisioning of Federal Bank has more or less peaked and it is well provided for bank.
Would this be a sector then again like pharma look at with renewed interest?
Absolutely. I am extremely bullish on banks, especially those who are in trouble?
Including ICICI Bank?
Absolutely, ICICI Bank carries lot of the characteristics of HDFC Bank, their current account-saving account (CASA) and their retail. It’s the legacy, which is the problem. That legacy is going to get over in 2018-2019. Don’t expect anything in 2018-2019, whatever these chairman and directors and analysts tell you. 2018-2019 is also a year of provisioning. But there will be growth in profitability. In 2019-2020, we will have absolutely clean year according to me, when nine out of ten banks will come back to normalise provisioning in the private sector, I don’t know about public sector.
And does this enthusiasm and confident then extrapolate to non-banking financial companies (NBFC), which has already seen a significant run up?
They are now more than well valued in my opinion.
So that is not exciting you?
That is not so exciting.
So you don’t see any enhanced value or opportunity there?
There are two ways you can gain an investment. One, is with earnings growth, but here multiples with earnings growth and with valuation growth. So in NBFCs, you may gain with earnings growth, but there is not going to be valuation growth in all these banks which are in trouble There is going to be both – earnings will grow and don’t expect in 2018-19, but 2019-20, 2020-2021.
Because you believe the provisioning process will continue?
In 2018-19, it will be over and in 2019-20, there will be normalised provisioning and there will be good growth. Why do you give HDFC Bank today five times book, because of its RoE, return on assets (RoA) and its growth. So the RoE and RoA of other banks will also grow and slowly growth will also come. So, I am not saying that it will be five times book, but surely good banks will be 2.5-3 times book.
Let me then talk to you about another bet that you seem to be making and that has to do with cases that are either in the National Company Law Tribunal (NCLT) or moving towards the NCLT. You did say in the past that the NCLT is a wonderful thing and the process itself needs to be refined, where do you see that entire process today and what excites you about the assets that are already in the NCLT?
What excites me most about NCLT is that it will improve credit discipline and integrity in this country, because every entrepreneur will now be afraid that if somebody owes me Rs 1 crore, a company, and I go to NCLT, he is paying. So this will improve credit discipline in the country.
Let us say, there is a large company, he does not pay the suppliers in time. Earlier, the banks used to accommodate the supplier and now the banks will not accommodate the supplier. So what will the supplier tell the large company? That either you pay me or I close down. So then, he will pay in time. So this is going to improve the integrity and the credit discipline of the entire country. People are underestimating what the effect of the NCLT is going to be.
People are – project lagao, project is actually Rs 2,000 crore, make it Rs 2,700 crore, only put Rs 600 crore of equity, so there is 1,000 percent return on your capital, all that is going to stop.
What is the larger economic impact?
The larger economic impact is more efficient use of assets.
And credit discipline. What about the individual companies as well, where you seem to be putting your money?
Now?
Yes.
I don’t have any money, I am fully invested.
But the likes of JP etc, which the markets track what you are doing with these stocks very closely?
I wouldn’t like to comment on my individual calls. I don’t even tell my wife, my only client. So let us leave that.
Let me talk to you about the metal story, because again that is the theme that you have bet on in a significant way given where we are and given some of these steel assets that are going through the NCLT process that is the only place where we are seeing a great degree of interest. Given where the commodity cycle today is, is this something that continues to look good to you?
I have put my bet basically on Tata Steel. I am extremely bullish. I feel they have got great value added. Bhushan Steel has got 1.6 million crore. So if steel prices were to come off, Tata Steel is going to earn in India a margin of less than Rs 25,000-30,000 crore. If prices remain, where they are today, their EBITDA could go to Rs 35,000-40,000 crore. So on an equity of Rs 1,200 crore, even with a debt of say Rs 75,000, it is easily serviceable. I think in the worst time, it is three times cover. Narendran points out again and again that you think steel prices are very high, but steel prices are only where they were in 2012-2013 and a lot of capacity is not feasible below a certain price. So I am very bullish on Tata Steel and that is the stock I bet on.
That is the stock you bet on and including several other Tata stocks. But since you are playing on this India theme, Tata steel fits in with that as well. Let me talk about some of the other sectors that often are fragmented continue to be fragmented underpenetrated, insurance is one of them and you are making a big bet there as well?
Insurance – I am trying to make a bet in health, because I think health is a prime need. I don’t think government can invest in any scheme.
You don’t put too much weight behind this Ayushman Bharat programme
There are so many products already there and I don’t understand it. Because today if I go with a heart problem to JJ Hospital, the government does operate me, but I think today at Rs 12,000, you can insure a family for Rs 4-5 lakh. My peon can afford this, Rs 1,000 a month, right? And India has reached that per capita GDP level, where a lot of discretionary spending on health and education and don’t forget, we are at least 20-30 crore Indians, who earns $7,000-8,000 per capita and can’t imminently afford health insurance. So I think, it is an underpenetrated sector, it’s going to grow at – in my opinion – at the rate of 20-30 percent for the next 10-15 years and it is a good area.
I don’t know how much you want to publicly talk about your proposed investment or not but let me hazard a chance here with that. What is the aspiration with this big insurance bet that you are making with Star Health?
Aspiration is to make money. What else?
Are you going to be hands on running it?
No, my office is my office, I don’t go anywhere. I got a team. We will be doing it jointly. It already has a very good management team.
Are you looking at similar such opportunities where you could put in that kind of money and the aspiration is not merely an investment?
If I feel the risk is worth taking and I can afford the ability to be wrong and even if I go wrong, my final stability will not be affected, I will take a bet anytime.
Is there anything on the horizon which looks similar to the kind of bet that you are willing to make on insurance?
There are things on the horizon but much smaller. I don’t have that kind of money to put in so many other companies and I am looking at a lot of opportunities but they are much smaller.
When do you expect closure on the insurance deal?
Who knows. Maybe this month, first week of July maybe.
Are you going to be getting your hands dirty with that venture. I mean beyond just the money and putting the team together?
No, I cannot – see my idea of life is tragedy. My idea of life is not operations. So you can go big in life with the efforts of others. It depends on whom you choose and what freedom they have and what rewards they have. So, I have no capability. Let us understand one thing, just because we have money, let us not try to do something for which we are not capable.
So since you are betting on health insurance, what about health delivery because the two are linked and this is again an underserved, underpenetrated?
But the health insurance is not a capital intensive business. Health insurance is very capital intensive until you breakeven. It is very difficult to breakeven. Once you breakeven, it’s not capital intensive, it is a cash flow business. Hospital is a constant investment business, so the return on capital there is – I bought Apollo Hospitals 5 percent of it in 1992 and I sold it for 22 times its value Rs 2,000, but I find it is too capital intensive industry.
You wouldn’t be interested in the sector and also I have questions on the business model and how the business model currently is?
The business, worldwide it’s the same. It is all the people who are shouting when their relative goes to the intensive care unit (ICU), what will they do. They will sue the hospital or take the patient. This is a same worldwide. It is not only India. That regulatory and all, nothing is going to happen. People are going to keep shouting.
You believe that it continues to be capital incentive unlike the insurance business, which after a certain point does not require that kind of capital but is this a sector that you would look at, at least some of the interesting opportunities?
I won’t close my eye to any opportunity but I have made my money in 1992 to 2000.
What is the Fortis bet about then?
I have 65 lakh shares, I have a very small bit.
Where else are you interested in fun and game so to speak?
It’s not fun and game, there is serious money even 65 lakh shares is Rs 80-90 crore, but it is not a very big. I do not want to go to areas by this. I think someone from Economic Times spoke to me, so I told them – I only said two things that a board appointed by shareholders who are no longer shareholders is going to decide on who is going to take over the company – that’s blatantly unfair. The board has to be remove and you have to run a due process and that is what they are doing today.
Real estate – you talked about how pharma has perhaps seen the worst, banking has perhaps seen the worst. What about the real estate space. Is that something that at this point in time…
This is an industry in the process of transformation. If you look at the balance sheet of the Indian listed companies and if you look at the capital employed, the return on capital in the last ten years on average has been 7-8-9 percent. What I personally feel is that real estate prices won’t go up, but volumes will go up and people are underestimating the effect of affordable housing on India in general and the subsidy that the government is providing. So I think real estate has bottomed.
But that hasn’t taken off much?
In 2018-19, we are going to – cumulatively we will build three times the houses we build in 2016-17 and 2017-18. This side will takeoff.
So is this a sector that you would look at?
Yes. I have investments in the sector. I have already looked at it.
And you believe that this is right for better times ahead?
I think so.
You expect that thing to happen next year or so?
Next two-three years.
Where else – we can talk about retail, we can talk about some of the other space where consumption of course continues to be the driver. When you on balance, look at the growth opportunity, valuations, earnings recovery, is there a matrix that today where there are some sectors that stand out?
The only rule is there are no rules and there is no matrix and that’s not how I invest. Rather than looking at sector, I look at specific opportunities and one thing I have learned that the lesser the prejudice and lesser the prejudgment, I has the better the investment. So if an opportunities come, I look at them with open mind. I am not close to any industry.
In the consumption space what would look exciting?
They are well valued.
The quick service restaurants (QSR) bets etc. and all of that are well valued?
Well valued and people are too bullish. I mean, it is going to be very good but all that is priced in according to me. According to me in the next five years, you will get a return, which is lower than earnings increase because I feel the private equities will correct.
On specifically, a lot of the consumption stocks that have already run up quite significantly?
Could be.
Where else do you believe that we are in that space where at least in the short to medium-term —
I am bullish on India in general and Indian market in particular. I do not have formal allocation. If I had made all those formal allocations and reduced my portfolios, because one company was too big, I do not have the wealth I have today. Luckily, I didn’t do all that. So, the companies which performed well, remained. So I do not look at things from the point of view of sector. Look at it from the point of view of the company.
Since you are bullish on the Indian stock market, you are also looking at the infrastructure behind the Indian stock market – MCX is a bet as well.
But they are doing well. Volumes have gone up.
So affiliated to the Indian stock market story, bets like MCX, is there any other interesting, exciting opportunities?
Yes I have made some interesting opportunities, you will hear about them.
When will we hear about them?
Whenever the transactions are completed. I have made some agreement to buy some market infrastructure company, small portion of it. So, whenever it is disclosed, it will be disclosed.
You expect that you happen within the next few weeks, next few months?
Next few months.
This is a single investment or there are multiple investments?
Single investment. Where is the money for multiple investments?
What would concern you today because we have gone through a phase of fairly benign macros? The micros are now starting to pick up. From a global perspective – what are the events that you are watching out for, what are the triggers that you are watching out for?
What can really upset India’s fiscal and monetary situation and the foreign exchange is oil prices. I think oil price to remain between $70-75/bbl, then I am not much bothered about the international scenario because India is not a big exporter. For Information technology growth, 10-15 percent is going to come. Indian exports are today where they were in 2012-13. I do not see Indian exports dipping below, regardless of what happens in the world. So I am not so much concerned about what happens in the world. What concerns me in the world are two things. One, sooner or later the euro is going to break, so tuned on what is happening in the euro. I think, that is one known which can flag off things and oil and commodity prices. I do not think anything else is going to do, trade war and all, nothing is going to happen to India.
You do not think there is going to be any collateral damage?
India is not such a big exporter, doesn’t have those kind of — unless and until US President Trump one day says, software imports. But that is not possible, because the price differences and cost are too apparent.
So global factors do not particularly concern you today?
They may temporarily hit the market but the market will come back.
The last time we spoke it was the third anniversary of the government and today it is fourth year on and we are now headed into election season. What would you say have been the areas where the economic thinking, economic policy, economic vision has lived up to the expectations that you had and where are the areas where they haven’t, where they have fallen short and I will raise one point as an example because this was something that you spoke of, I remember in our interview, strategic disinvestment. You were very bullish. We saw the government announce a big list of candidates for strategic disinvestments, Air India…..
They tried their best in Air India. What I feel is that – for the real effect, what I wrote when PM Modi was elected – he requires two terms, even in Gujarat. When he first become the chief minister, the first term was all planning. The execution came in the second term. Second thing is he is handicap by a lot of things that states can and he cannot. For example, electricity losses. Gujarat is one of the few states which is electricity surplus
Not any longer, it’s now deficit.
Because he is not there, that’s why. So the question is he needs time. I think the economic thinking has been very correct, very realistic and I support whatever the street say. I support the scheme of government to give a minimum support price for all crops to farmers, because think about the farmer. If he gets a crop, he doesn’t get the price. If he gets a price, he doesn’t get the crop. So instead of saying that we should buy and we should store and we should sell. If they procure Rs 15 wheat, Rs 15 is the cost of storing it and handling it.
Except that there is no announcement on the new Minimum Support Price (MSP) just yet?
But they are going to do it. I think that is required. And remember one thing, India has $45 billion of executional export and they are the most value-added exports. What I feel is, we must have Make in India, but we must make efforts to modernise and commercialise agriculture. You must allow corporate farming because India cannot, in my opinion, absorb the workforce only in manufacturing and agriculture can be a big, we can be a big exporter.
Our yields are lower than Bangladesh and Pakistan. So I think, we need some efforts in that, otherwise, whatever policies the government has enunciated – it has predicted that it will raise the tax to GDP ratio by 300 bps – Rs 10 lakh crore is income tax collection last year; Rs 11.5 lakh crore this year and look at the ease, for the first time in my life, I have received a refund without going to the department.
GST, I think is a game changer. People had predicted that GDP will go up by 1.5 bps to 800 bps; 1.5 percent to 8 percent by Federal Reserve and now nobody is talking about that. Only talking about problems. We have to understand that all correction and all change in this country is a process. It’s a democracy. It takes time. I think we are going in the right direction, although, I would be happy if the speed is enunciated but it will.
Any particular policy where you believe that there needs to be much more urgent action? Again, I will refer you to this business of now the need for national asset reconstruction company (ARC) or national asset management company (AMC). Yesterday in a conversation with me, the SBI chief said that the need of the hour is a national AMC and perhaps a good starting point would be to put these de-stressed power assets into that national AMC.
I think, where we had to take urgent, the time for that is over now, except these power plants. We are coming to now, all those companies are in NCLT, majority of them. So all those resolutions, if this was done, it should have been done three years ago.
That was the point I was asking you?
They can still do it for the power plants. I think, the urgent need of the hour is that today Air India loses Rs 3,000-5,000 crore a year. I think MTNL and BSNL are next. So government needs to take action and do something before they become the next Air India. MTNL already is the next Air India.
Are you hopeful that we could expect anything on that front, I mean look at what happened with Air India?
If PM Modi is elected, it will be done in the second term, 101 percent. If Modi gets majority and is re-elected, which I think most likely he will be, people will be surprised by the reform and change that will take place. I don’t agree with businessmen that he has done anything against businessmen. Lot of businessmen are disheartened. I don’t find he has done anything against any business.
Why, what are businessmen telling you?
Lot of people are afraid, they will do this, he will put this tax, he will do this. I don’t think he is against the rich. He is a distilled socialist. Who is a socialist? Who fights for every piece of the cake, he says everybody must have the cake equally. He wants everybody to should share the cake. But he knows that to enlarge the cake, you need good economics. So he says, first let us try and enlarge the cake, then we will think of how to distribute. So, that is what my feeling is. Even if he puts some taxes, you must not forget that we are very fortunate people in an extremely poor country. I don’t like to pay taxes, but whenever I have to sign that cheque that thought always makes me feel good that it is my duty.
Since you are talking about parting away with your wealth in the form of taxes, but you have also made a commitment through philanthropy, you have got your birthday coming up and then of course as you turn 60, you have got a plan in terms of what you intend to do with your money towards philanthropy. Has that already in some structured way, have you started thinking about how you are going to use it?
I have placed 25 percent of my wealth to charity or Rs 5,000 crore, whichever is lesser. So, now I am going to remove that limit of Rs 5,000 crore.
You are going to remove the limit?
Right. What I am going to do is, I am going to give the money in stages. In 2030, I want to give 25 percent, but I will start with a good sum on my 60th birthday. Then over stages, by 2030, I will give away 25 percent.
Where are you going to make that beginning? What would be the first areas, the first sectors, the first organisations that you will be supporting?
My 60th birthday is still 25 months away, so 12 months before my birthday, I am going to make a team and then we will decide. One area I am thinking of working is eye operations, because the return on capital on cataract operations is so great. I am building an eye hospital with Shri Sankara organisation of Coimbatore in Tamil Nadu. We are making a 225 bed hospital, where we will do a 15,000 free operations a year. It is a model of 20 percent charge, 80 percent free when it breaks even. There are so many areas, if you think of it, no amount of money is enough and no amount of effort, but my thing is going to be to give the money and not interfere too much. Sometimes I think give it to some trust only, let them do it, but it is a commitment which I am going to fulfill.
It is a commitment and you have now told us that you are removing the self-imposed cap that you had put while doing that?
But I will give it in stages. I will start on July 20 and by 2030, I will give it around. Let us hope god gives, the giver of all wealth is god. He gives hope, he gives me the power and tenacity to give it away.
Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout
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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow