What has Modi done?
Many flashes in the pan are routinely propped up as the ‘next big thing’.
Kanhaiya Kumar, Hardik Patel. And now, Rakesh Tikait — the last standing face of the ongoing farmer protests in India.
Why don’t they last enough to erode Modi? Worried about the continuous onslaughts nonetheless & what we can do about it? Read on..
[This is a collection of my tweets on this topic along with elaborations where the character limitation on Twitter was a restraint.]
I’ll expand a bit here. When you ‘short’ a stock, you don’t actually buy the stock. You don’t invest in it.
You borrow it today. Why would you borrow it? The reason is that you anticipate the stock price going down in the near future. So, you borrow it to immediately sell it.
Let’s say, you anticipate that gold prices will go down next month. You ask your friend to lend you 5 gold coins (s)he has. You then sell them at today’s price (assume it’s $100).
When the gold prices go down in a month (say, to $70), all you have to do is buy 5 gold coins at $70 and return it back to your friend. You gained $30.
That is what the ‘Short India’ gang does. It does not invest in India to hope that India grows.
Until… it drops in value. So, it borrows today, with a desperate hope that India is soon disintegrated, so that they can pick up the pieces to perpetuate their power.
How do they do it?
Will pause the thread at this point.
If one studies Modi’s governance policies in the first few years of his first term (2014–2017), one would be frustrated. Why is disinvestment not happening? Where is the quick growth? Is this the big idea government we voted to power?
What Modi government was doing was assiduously laying the ground for further policies to be built upon. Equivalent to a farmer preparing the soil for the next harvest.
He unabashedly adopted many policies of the previous governments which were criticized by his own party (Aadhar, MNREGA etc) and introduced some new ones. Millions of new bank accounts were opened up for the poorest of the poor. Bank officials were encouraged/incentivized to go to the remotest villages to open bank accounts even at Rs. 0 balance.
Why? Yes, the poorest in India got the dignity of being a bank account holder even without a minimum balance. Equally important, these bank accounts came to use during several tranches of direct benefits transfers to avoid pilferage and loot that was commonplace in disbursements in all previous regimes. Especially during Covid-19!
Back to compounding. Warren Buffet’s growth trajectory provides a great illustration:
Why does this happen? Because of ‘tailwinds’ — another word commonly used in the world of finance and economics.
Merriam-Webster defines ‘tailwind’ as a force or influence that advances progress toward an improved condition. Warren Buffet’s wealth exponentially increased due to several tailwind events which he wouldn’t have benefited from had his base investment not been compounded over decades.
In the constantly evolving global economy, how can India take maximum advantage of tailwinds that get thrown at us? By building a solid base which is compounded assiduously with a long-term vision.
This is why you don’t see Modi expending his all in responding to his opponents. We often wonder — why is Modi silent? Why is he not responding? I believe (and he has mentioned this on several occasions as well) that he is keeping the principal in his Long India vision intact.
But what do his opponents do? Why doesn’t it work? Why does the Short India gang have to hop from one ‘next big thing’ to another?
This is why I call Modi’s opponents ‘flashes in the pan’. They disappear as quickly as they arrived on the scene. Most (if not all) lack a long-term vision.
Because ‘shorting’ itself is the very antithesis of long-term investment. It is a bet to benefit from picking up the crumbs of a destroyed stock.
Why, then, does Modi appear unaffected when things often appear to get out of hand?
So, then why 303? [Modi’s party — BJP — has 303 out of 543 in the Parliament of India which puts it at a very comfortable majority]
We mostly think of money as a means to buy goods. The latest gadgets, a much bigger house, flashy cars. What we forego with that, little by little, is freedom.
Same with 303 seats.
Indeed, there are always exceptional times to break into one’s principal, but those are rare:
So, where do we, stakeholders in the India growth story, fit in?
Addendum:
I believe Modi is continuing to build India brick by brick despite bureaucratic lethargy leading to slow and, in some cases, non-existent on-ground implementation. We are, after all, a democracy with entrenched systems.
There may be many things about this government’s policies or pace of doing things that may be frustrating. But when it comes to exercising one’s most valued right in a democracy — the right to vote — vote for the person who is consistently and unwaveringly ‘Long India’.
Flashes in the pan are, well, just that. Temporary attractions for entertainment.
