Chandan Karmhe
From a prodigy to a savant; unveiling brilliance…
We are pleased to present you with an exclusive read that would fuel your insatiable pursuit to be informed about the hype across the world. This time we have brought to you some priceless tidbits based on the excerpts of a conversation held with an exceptional professional who is passionate to talk about a multitude of issues lingering around the globe.
Chandan Karmhe accomplished the remarkable feat of becoming a qualified Chartered Accountant (CA) at the age of 20, making him one of the youngest individuals to pass the challenging CA exams. Despite being under the prescribed age of 21, he successfully attained this prestigious qualification. After becoming a Chartered Accountant, Chandan pursued further studies in Finance at India’s esteemed management institute, IIM-Ahmedabad. He subsequently obtained a degree in Law from the renowned Campus Law Centre, University of Delhi.
Throughout his professional career, Chandan has gained a wide experience working with corporations, banks, commissions, and foundations. He has also served as an Advisor to both State and Union Governments.
Over the years, Chandan has collaborated with India’s national leaders and renowned members of India’s civil society on a diverse set of public policy assignments. He regularly contributes columns to India’s leading publications and his work has been referenced in research papers. In talks with our team, Chandan Karmhe sheds light on different topics and offers food for thought to our global readership. Let’s dive in:
• Business Connect: In your piece for a leading newspaper, you argued that India is at a point of confluence, do you continue to be optimistic about India?
Chandan Karmhe: Whatever you can rightly say about India, the opposite is also true. India is a special situation country, it has the potential to disappoint both the optimist and the pessimist. So, one must practice caution in forecasting about India. However, I do believe, there are multiple factors working in India’s favour.
The 1991 Economic Reform laid the groundwork. The Indian economy has grown over 10 times since the reform. 1991 showed us a direction. A shift our economy longed for. Much of the compounding from that is yet to arrive. India’s public infrastructure has improved. The most incredible sight however is the transformation in India’s digital public infrastructure. The India-Stack revolution led by Nandan Nilekani.
This is an extraordinary movement, and one is yet to see its full prowess. It is going to impact nearly everything. Further, our working-age population is growing, unlike most countries. No country can grow at a fast pace without growth in its working-age population. This, even in India’s case, is not going to be a forever phenomenon. However, currently, we are in a sweet spot. I also believe India will take a faster route to formalization. Add to that the buzz around start-ups. So, more young people vis-a-vis the past will venture into businesses and generate jobs.
Mobile Internet costs less in India. In fact, in mobile data consumption, India is the world leader. This opens avenues for digital commerce. There’s an upswing in the financialization of savings. We have a decent runway for growth. We are the fastest-growing large economy — I wouldn’t be surprised if we continue to remain so, in the coming years. Our stars look aligned.
• Business Connect: In the context of India’s future, is there something that exercises your mind?
Chandan Karmhe: It’s rather sad that we are not creating an atmosphere in this country where women can in full measure participate in our economic future. More and more women continue to withdraw from the workforce. In 1995, our Female Labour Force Participation rate was 32%, it has fallen to an unfortunate 19-20% now. This is tragic, to say the least.
Ours is not only much worse than the developed countries, but it’s also worse than our neighbours like Nepal and Bangladesh. I also spend a lot of time thinking about how most of our colleges take away from our students the most important years of their youth to teach them nearly nothing. Our young people have to struggle on the job and learn the basics after they are employed. The IITs and the IIMs are islands of excellence.
They cannot embrace our entire college-going lot. India’s manufacturing prowess has to improve. Millions of people join the workforce every year. We have to look at small countries like Vietnam which are excelling at this. Also, broadly, I also hope our people do not fall into the sunk cost fallacy and continue to invest all their youth in trying to secure a government job. Any Government’s capacity to employ is limited. I would also wish for India to have more respect for people who try to build something of their own. It’s sacrosanct.
• Business Connect: What’s happening in India’s taxation space?
Chandan Karmhe: GST was an essential reform and if implemented well, it has the potential to make India feel like one market. However, the law is yet to settle down. There is and will be a lot of litigation in this space. It’s a natural phenomenon for a reform of this nature in the statute books. There’s a plan to set up more forums. The collections are improving.
In the Direct Tax space, apart from the growth in collection, one also observes a growing space for entrepreneurship. There are online portals, now, which offer their services to people for filing returns. In Assessment, the Faceless digital architecture is a step in the right direction. There’s always a need felt for simplification of our tax laws. Especially Direct. It should, however, be an incremental reform.
• How do you see the massive jump in the number of investors in India’s stock market? Is this sustainable?
Chandan Karmhe: With a pinch of salt. When you watch the Indian Premier League (IPL) on your digital device, the number of viewers grows to staggering numbers when the match reaches its climax. The viewership, though, is not consistent. IPL is for entertainment. The financial markets are not. Investing, as Warren Buffet says, is like watching paint dry.
It’s not supposed to be a lot of fun. Equity investing is professional work, like surgery. There’s a surge in the numbers of investors when the NIFTY is soaring, and then they leave when it’s not — with unpleasant outcomes. Equities are, I believe, the best form of investment. There’s nothing like owning a piece of business. However, you don’t have to execute it yourself. India has some excellent professional fund managers. They can do it for you.
• Business Connect: Okay, let us ask a different set of questions now…
Chandan Karmhe: Sure.
• Business Connect: Do you have any favourite investor from the Indian investment space?
Chandan Karmhe: Different people for different sets of skills. Rakesh Jhunjhunwala for the courage of his conviction — taking outsized bets. May his soul rest in peace. Ashish Kacholia for his humility and for his sheer ability in picking unknown wonders. Sunil Singhania for his discipline. Samir Arora for his experience, clarity, prudence and for his wisdom in picturing the world as one.
• Business Connect: Who’s your favorite business person from the new generation?
Chandan Karmhe: Nikhil Kamath, Zerodha. I really like people who are able to look at their own businesses from the perspective of an outsider. In the same way Mahendra Singh Dhoni sees the game of cricket as an outsider while being at the epicentre of it.
• Business Connect: Who are the writers whose work you’d recommend as essential reading for our readers?
Chandan Karmhe: Oh, there are many. Every heart has its own leanings. However, there are some books that add
meanings to your life more than the others. I’d suggest Amartya Sen’s Argumentative Indian; Sanjeev Sanyal’s Land of Seven Rivers; Gurcharan Das’ India Unbound; Ram Chandra Guha’s India After Gandhi as the first pack of essentials.
In Business & Economy, I really like Saurabh Mukherjee’s Unusual Billionaires; Ruchir Sharma’s The Rise and Fall of Nations and Harish Damodaran’s India’s New Capitalists. These are Indian non-fiction writers. There are great works of art in the Indian fiction space too. Then there are people from around the world who have written some extraordinary books. But, maybe we should keep that for our future interaction.
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