It is an incredible privilege as investors to be able to travel in emerging Asia and witness the positive change on the ground. This is especially true in India where Arisaig have been investing since the late 1990s.
As we try to make sense of the world around us, one idea that strikes us is the importance of the ‘American dream’. The belief in this idea has been central to the US growth story over the last century.
Books have been extensively written about what helps countries rise: geography, resources and institutional strength all play a role but, fundamentally, all countries are driven by people. People are driven by motivation, a belief that effort will translate into positive outcomes.
The belief in the ‘American dream’ was this source of motivation for people in the US. The idea that everyone has an equal opportunity to succeed.
You do not have to look hard to see the emergence of the ‘Indian dream’. Indians are far too practical learning from their own history to believe that everyone can have an equal opportunity. Instead, the Indian dream is simply about having a better life than the previous generation.
The child of a taxi driver in India knows they cannot pay tuition fees for a foreign university and needs to start earning a salary by the time they are in their early twenties. A housemaid’s child knows that they will not get the best coaching or counselling for competitive tests or have the freedom to launch a startup.
But both children also know that they will stand a good chance of not working as a taxi driver or housemaid, if they study and are prepared to work.
There will never be enough jobs in India but the base case for those children is achieving a white collar job; this could be as a software engineer, an accountant, in HR or sales and marketing or in one of the 75,000 SMEs in India. Consumption is nearly 70% of India’s GDP, a similar level to the US and so, AI or no AI, there are a wealth of opportunities supporting the rise of a growing consumer class.
Whilst Modi has been busy with structural reforms (a national goods and service tax, demonetisation, banking reforms), we think the most important indicator was back in 2019 when corporate tax reductions were reduced from 30% to 22% while personal income taxes were left broadly unchanged. The support of this measure – not just in parliament but by the people (who are not shy about demonstrations!) made clear that the link between private enterprise and jobs was well understood.
India will have its challenges, like any country, and a westerner visiting would still perceive it to be nothing short of chaotic. But when you sit in the front rooms of an Indian household, it is clear that there is confidence that a better life is waiting, and the ‘Indian Dream’ is alive and well.
