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How India fits into the global economy: It may not be China, but at least it isn’t Russia

Journalist James Crabtree came on Recode Decode to talk about his new book, “The Billionaire Raj.”

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Traffic in Mumbai, India
Traffic in Mumbai, India
Gareth Copley / Getty

On this episode of Recode Decode, hosted by Kara Swisher, journalist James Crabtree talks with about his new book, “The Billionaire Raj: A Journey Through India’s New Gilded Age.” Crabtree says India’s development of a super-rich billionaire class has heightened the country’s already-intense problem with inequality.

You can listen to Recode Decode on Apple Podcasts, Spotify, Pocket Casts, Overcast or wherever you listen to podcasts. Below is a lightly edited transcript of the full conversation.

Kara Swisher: Hi. I’m Kara Swisher, editor at large of Recode. You may know me as the author of several books, which are just screenshots of my best tweets, but in my spare time I talk tech, and you’re listening to Recode Decode from the Vox Media podcast network.

Today in the red chair is James Crabtree, who has the best name ever. He has written a new nonfiction book about the world of “reclusive billionaires, fugitive tycoons, and shadowy political power brokers,” and it’s not about America, it’s about India. The book is called “The Billionaire Raj” and it’s out now in hardcover. James, welcome to Recode Decode.

James Crabtree: Thanks for having me.

Let’s talk a little bit about the book itself, but first, how did you get to writing about billionaire rajs in India? Give me a little history, your short history.

I lived in ... my little history. I moved to India in 2011 and I lived there for five years in Mumbai, the financial capital. I’m a journalist, like you, by background. I used to work for the Financial Times and various other magazines.

That’s a fancy newspaper, from what I understand.

It is a nice pink newspaper. When I was there, I mean a lot of foreign correspondents are now writing books about India because it’s a fascinating place, but not many of them do it in Mumbai. I was covering banking and finance. I was in the city that all of these guys who are making all the money and having their ridiculous big houses at the time that this was happening. I became fascinated by how they made their money and what the effect of it was.

Right. Most of them were ... Was this your area of coverage? Just rich people? Or what?

No, I covered everything. I covered all of corporate India, so banking, finance. I covered tech. The startup scene. All sorts of things, but in a sense, lording over it, physically and metaphorically, were the super rich, the billionaire class. While I was there their numbers were expanding. Dozen at a year.

Through tech, a lot of them, too. Through tech and other areas.

Well, so the tech ones came a bit earlier, so this is sort of part of the story of the book.

Give the landscape of these billionaires.

Go back to the mid 1990s, India started to open up its economy after 40 years of socialism. It got independence from the Brits — you can tell I’m a Brit — in 1947. Began to liberalize in the mid 1990s. Initially you had a few billionaires who were creative and many of them were tech billionaires, so that was sort of the early, the first decade in the ’90s. You had people who were doing IT outsourcing in particular.


Yeah, Wipro and Persist, TCS. They made a lot of money. Generally they were a very good thing and still remain that way. They’re admired figures. People like them. It was in the mid 2000s, which in the rest of the world was the time of the great moderation, growth going crazy, China entering the world economy, and so India reglobalized. When that happened, you had a second wave of billionaire wealth creation that happened in a much more dubious way. Lots of corruption scandals. What the economists call rent-seeking. That is really the heart of the book. This portion of what you might call the bad billionaires as opposed to the good.

Mm-hmm. You can make a difference between them? Talk about, when you mean bad, when you are saying rent-seeking, explain that more for the average person.

Yeah, so rent-seeking is an economic term, but basically it means, let’s call it crony capitalization. Crony capitalism means collusion between the political and business elite. Let’s say, go back to the mid 1990s, you are probably ... Nandan Nilekani is the most famous IT software billionaire. He’s the guy who came up with the phrase, “The world is flat,” for Thomas Freedman. Thomas Friedman was sitting in his office in Bengaluru, and Nilekani sort of used that phrase to describe globalization. He made his money pretty honestly. He found a way of taking Indian-type workers and exporting to the world. Earned billions of dollars in revenue and therefore became a very rich man. Totally fine, nothing wrong with that.

In the mid 2000s what happened much more often was that basically these businessmen started colluding with politicians to get hold of things that only the politicians could provide. Now that might be a ...


2G, 3G, telecom license. There’s a big scam, might be a mining license, might be land. Could be for building skyscrapers in the city. Could be land for building a steel plant in the countryside. In a sense, the politicians and the business people would collude and then they’d sort of split the difference and keep some of the profits for themselves. That was why India had ... India’s always had a lot of corruption. Retail corruption, you know, you pay a bribe to a politician, pay a bribe to a policeman, or to get a marriage license, but in the mid 2000s that retail corruption sort of went wholesale. That created a lot of wealth, but it also created a whole range of corruption scandals from which India’s only really just recovering.

Right. Talk about the impact of India, because it’s always been seen as the possibly second tech power, but it never became that. I want to focus a little more on tech because it was such a promising area. I traveled there, oh my, back in the 1990s, when they were moving away from being sort of an economy that provided backup support essentially for U.S. tech growth, for example. I remember writing a story about a guy that was developing a dormitory arrangement on a former, I think it was a yak farm, I’m not sure. It was something like a water buffalo farm. They were doing it because it was so difficult to travel in India. Support staff was hard to get to work. There were electrical outages and stuff, so he created his own village. He was a Microsoft executive. They were doing just-in-time programming, essentially.

Talk about sort of how India’s gone, because you know it’s been displaced by China and by Israel and other places when everyone thought that India was going to be that ... and it still is, obviously, it still is a strong tech economy.

I mean, I suppose I would ... I understand what you say about China. China has had an enormous boom in consumer tech, right?

Oh, China’s No. 1 now as far as I’m concerned.

It’s sort of miles ahead. India remains an enormously strong tech economy. If you go down to Bengaluru or Hyderabad, you have big, you have plenty of unicorns, but you’ve also got people providing tech services for people all around the world. That remains the case.

I suppose two things happened. One, the tech side of the economy sort of got eclipsed by the side of the economy, which is in my book, which is the sort of slightly darker, dirtier side of the economy. Then you have a more recent story, which I think is sort of interesting from your point of view, which is after the Chinese tech boom, particularly after the Alibaba flotation, a lot of investors — both here in Silicon Valley but also people like SoftBank, the hedge funds in Hong Kong, Tiger Global, these sorts of investors — they all got very excited about India and thought, “Okay, India’s going to be the next China. We’ve all got tons of money. We just made an absolute packet on the Alibaba flotation, so actually it’s silly season.”

It was one of the earlier examples of what you see now with SoftBank in general, which is just money being sprayed around everywhere. When I was there in 2012, 13, 14, probably, 13, 14, this was the height of this, lots and lots of very aggressive investment by foreign VC funds. They had a sense that India was going to be the next China. It hasn’t quite worked out like that, but in the medium- to long term, India clearly is going to be a hugely important tech economy. I mean, it’s a vast economy. It’s got 1.3 billion potential consumers. The story of India tech is just that it’s going to take quite a bit longer to get where China has gotten to, for reasons that maybe we can go into.

Right. Let’s talk about these billionaires. Outline what they do to the economy. It seems malevolent throughout that it’s not helpful necessarily, except for a small cadre of people and elites.

Well, so this is ... To move us back outside of the tech world, you’re thinking here, think in your head of ... I mean, the subtitle of my book is called “The Billionaire Raj, India’s New Gilded Age,” and so the image you should have in your head is really of a Gilded Age tycoon in America. These are kind of robber baron tycoons. They run conglomerate businesses. They’re doing things like building steel mills or building toll roads, ports. To some extent they do perfectly good things. They’re building reasonable assets. India is not Russia. These guys are not out-and-out crooks. They’re not only relying on their political connections to make money. Typically they’re reasonably skilled business people who try to get an extra yard of advantage by working their political connections. That’s sort of how India worked before, it’s how it worked in the socialist era.

Then when the walls came down and everything became much more valuable, that’s still how it worked until all of these big corruption scandals happened in the 2000s. That’s sort of a good and bad thing. They built some reasonable infrastructure, but in the end what happened was they got a bit too greedy. There were these big corruption scandals and there was a huge public backlash that happened at the end of the 2000s. India’s only really just recovering from that backlash because there’s been public scandals and the prime minister, current Prime Minister Narendra Modi, won an overwhelming election in 2014 on an anti-corruption platform and had promised to clean things up.

Where is India now then? You’ve got all these billionaires running around. Most of the billionaires in this country in the past 10 years have been tech billionaires, but this is wide-ranging, so what is the state of the economy there? Then in the next section I’d like to talk about some of the controversies around WhatsApp and other things like that that’s happening there, the political scene that’s allowed this to happen.

What’s happened in India is the billionaires have not been created in the tech sector, and that’s a bad thing. I mean in the sense India could do with a lot more tech billionaires than it has, because generally they’re, broadly speaking, creating value and doing good things. The billionaires that have been created are typically in these slightly more dubious sectors, sort of close to the government, and the number of them is stunning. As I say, middle of the 1990s, there were two of them. Between them they had about $3 billion, now we have 119, 120, together they’re worth $450 billion.

That’s more than any country outside of the U.S. and China. Compared even to China, at a comparable stage of its development, so China liberalized about 10 years earlier, so it’s sort of 10, 20 years ahead, but if you take India and China when their economies were about the same size, then India has 10 times as many billionaires as China did then. It’s creating wealth at the very, very top at a huge rate, but the rest of the country is falling relatively behind. You know, the middle class, the middle 40 percent, has seen their share of national income decline quite a lot, while the top 1 percent — and the top .001 percent — have shot up ahead.

The implications of that being? You have someone like Modi coming in to ...?

Well, the implications to that is it’s not a great place to be. India is already probably the most unequal large economy in the world, comparable to Brazil and South Africa. It’s at a much earlier stage of its development. If it continues on this path, it will become an almost unprecedentedly unequal country. There’s all sorts of problems ...

Sort of like San Francisco?

Yeah. Maybe. Yeah, exactly. As I was walking around this morning, a little bit like that, but there’s all sorts of problems that come with that. There’s pretty good research from the IMF that very unequal countries are less stable. It’s less easy to introduce economic reforms. Yadda, yadda, yadda. There’s all sorts of problems which come from very, very extreme inequality.

Some inequality is okay. There’s successful developing of economies of East Asia, you know, they weren’t Sweden. They had lots of rich people, but they’re a bit more equal than India was. They’re a bit better at making sure the rich pay their taxes. A bit better at making sure the sort of lower and middle classes and working classes had good health care and education.

Not destitute.

Yeah, that’s right, and were able to move them more efficiently from farms, where most of them worked, into factories, and then onwards, up the value chain. India has a problem with extreme inequality. It’s almost ... You know, so take a step back. What’s your image of India in your head? It’s an image of inequality. People know about the caste system. They know about extreme poverty. There’s a lot of other inequality in India. The south is richer than the north. The cities are richer than the villages, but it’s almost because we all think that India’s a very unequal place, we haven’t noticed how spectacularly more unequal it has become over the last 10 or 15 years.

That’s a really good point. When you talk about what has happened here and the development ... As I said before, one of the things that happened in this country was there was sort of a push from entrepreneurism, essentially, that got to where we are. A lot of the people started as small entrepreneurs. In your case you’re talking about people that are advantaging themselves using politicians and other means. Talk about the entrepreneurial nature of the country, because again it’s a country that I think was bypassed for China and Israel, essentially.

India has a fantastic entrepreneurial culture, even the people who are corrupt are entrepreneurial. Right? The scams are extraordinarily inventive. There’s a huge energy in sort of Indian business culture. Look at Indian diasporas all around the world. Here in Silicon Valley more ... amongst the tech companies that are started by non-Americans, Indians are dominant.

Absolutely. Yeah, Satya Nadella, Sundar Pichai.

More chief executives, but particularly immigrant-started companies. Indians start much more than the Chinese all the time when you switch to the next groups down. All around the world Indians are successful. There’s huge entrepreneurial dynamism.

What I think people have got wrong about the Indian tech economy and why it is perceived to be a relative failure is actually some fairly simple things, which is that even though India has this ... it has Bengaluru and Hyderabad, it has this sort of amazing tech culture and it has people like Satya Nadella, who are these icons, it’s still a very poor country. If you want to build a B-to-C e-tail business, or sort of Amazon-style business, then you need rich middle-class consumers and India doesn’t have that many of them. The size of the India middle class is super tiny. Much, much smaller than you would imagine. Maybe, I think the figure is about 10 million people earn more than $20,000 a year. It’s tiny. You can’t build these mass businesses on top of that.

Add on to that, India’s still, its infrastructure is pretty hopeless. It’s getting better, but you need cold chain logistics. You need just-in-time delivery. All of the things that give Amazon its edge require a really good infrastructure. Amazon’s in India at the moment. It’s one of its most important developing markets. It’s investing $5 billion. Walmart just spent $16 billion to buy Flipkart, which is the biggest unicorn in India. Its valuation has been declining a bit, but I think it’s about $12 billion now.

Yes it is.

It was maybe $20 billion at its height, but the innovation often occurs in the Indian economy is in a sense workaround. It’s a kind of kludge style of innovation, where ...

Kludge. Is that a technical word?

Yeah, it’s a technical term for like a workaround. There’s a guy in Washington who talks about D.C. as a kludgeocracy because you can never do anything the right way. You’ve always got to kind of sort of fix something that’s broken.

I like that word.

Take an example. I used to live in Mumbai. It’s a city of 25 million people. It’s a little bit like Manhattan if you think about it in your head. It’s a peninsula, tightly packed, very fast moving and energetic. It’s got banks and skyscrapers and whatnot. Doesn’t have, as with anywhere else in India, an address. Literally my address where I lived in our apartment was the name of our apartment building and it said, “next door to Radio Club,” which was like the famous building a block away, because there isn’t an address system. If you want to run ... That’s just one tiny example of 100 things that these guys have to fix, which is how do you deliver something in the post when there isn’t a proper address system in India?

All of these things just mean it has taken a lot longer to build these businesses and the size of the market, in the short-term, is not really big enough to have justified all of the investment. Basically it’s a classic example of investors not really doing their homework properly. They saw the Chinese example. China had real hockey-stick growth from one year to the next. I don’t know when, 2009, 2010 ...

And a growing middle class.

Right. Big middle class. Great infrastructure. Reasonably supportive regulation boom. Suddenly China has more retail e-commerce customers than anywhere else in the world combined. People thought that would happen in India. It hasn’t, and so they’re very disappointed, but the reason that hasn’t happened is really quite explicable. If you just look at where India is in its stage of development now, in the medium-term, in the long-term, it is going to happen in India. In fact, there’s a case to be made that these big tech giants aren’t going to be more influential in India than anywhere else, because there isn’t going to be a Walmart in India, there’s not going to be a stay. We’re going to go straight from crummy little corner shops to everybody shopping online. It’s just going to take a long time to get there, and therefore ...

There’s no equivalence to Amazon there. I’m trying to think ... there’s smaller ones ... nobody ... you know, in China, you could name WeChat, the Tencent people, the Alibaba people, there’s a bunch of very large — Baidu — big companies. And in India, there’s fewer.

Correct, and that’s also partly a good thing. That’s because India and China have very different tech ecosystems. You know this. But China’s totally closed. And so part of the reason why China has these giant domestic tech corporations ...

Is the government is so closed.

Is because the government didn’t let all the good American companies go in there, or they totally hamstrung them to the point they couldn’t repeat. So, one of the reasons, I guess, why India doesn’t have its own equivalent of this is it has Google, it has Facebook. India is now the largest market by users for every one of these tech giants.

Right. It is. Facebook ...

Twitter, WhatsApp, Google, all of them have ...

We’ll get into that in a minute.

And so part of the reason why India doesn’t have domestic giants ... I mean, it has Ola, which is the Uber rival; it has Flipkart, now bought by Walmart, which was the Amazon rival, and a bunch of other sort of consumer plays, but it doesn’t have the platforms. Although there is one called Paytm, which may become a platform, which is an Alibaba-backed payment play, but it doesn’t have those because it has the American ones. So, if you’ve got Google and Facebook and Twitter, then, you know, why do you need your own indigenous version?

Unless you keep them out. It’s too late.

Yeah, but I mean, I think the theory would suggest that India’s open ecosystem should have advantages over the Chinese one in the long run. Again, that’s a very interesting theoretical question, because obviously the innovation that you’d get off the Chinese mega platforms is amazing. I spent some time in China. I now live in Singapore, so I’ve written a bit about Didi and Alibaba and Anton in particular, and there’s clearly something amazing that you can do with these sort of huge Chinese companies that you can’t do elsewhere.


But the open innovation system that India has, when combined with real depth of programming talent in particular, at the very top end, in cities like Bangalore, and the links that you have with Silicon Valley, that should have some long-run advantages.

Yeah. Presumably. You can do very well when the government has your back, essentially.


So talk a little bit about if these companies are in there. I’d love to talk to you about it, and then I want to get back to talking about some cases in your book, in the next segment. But what’s happened with WhatsApp? Obviously lot of people have been writing about this, about murders and lynching. All kinds of bad behavior based on WhatsApp. Can you talk a little bit about that controversy?

Yeah, so what has become the latest sort of poster boy of bad social media behavior.


It’s happened in the last month or two. India, regrettably, does have quite a lot of lynchings. This is just a fact of life in a country that has a weak police force and a weak state. But WhatsApp is amazingly popular in India. It’s WhatsApp’s largest market.

This is a Facebook-owned messaging app.

Yeah. For those who don’t know, it’s a Facebook-owned messaging app. Facebook bought it two or three years ago. Paid what seemed to be a big price.

$15 billion.

But got a bargain, I think. It’s amazingly popular in India.

Or 19 billion.

Everybody uses it. It has become the latest example in the phenomenon of online disinformation/fake news, that people in addition ... So one of the sort of funny things that happens, there was a great article in the Wall Street Journal a little while ago about how India wakes up in the morning, and everyone sends each other these funny little GIF messages saying, “Good morning.” Or, “We are blessed today.” Both WhatsApp and also Google discovered that this was gumming up their servers in the U.S., because of the popularity of the service.

But it’s also used to forward badly sourced false information. So in this case, in these villages, there have been a rash of examples in which WhatsApp groups appear to have been used to coordinate lynchings of suspected child abusers.


Now that’s what happened. Whether that is actually true or not, I’m rather skeptical. You can never really tell. It seems to me that there is likely to be some portion of this, these were just lynchings that would happen anyway. People use WhatsApp, so WhatsApp is being blamed.


But it speaks to a much bigger problem — for Facebook in particular but to a lesser extent for Twitter — which is happening all across Asia, which is when you slap these social media platforms on top of poor developing countries that have deep social divisions and no real media, weak established media, you get big problems. Big problems of spreading hate speech. Big problems of false information. Big problems also of actually these things being manipulated autocratic regimes. It’s not so much true in India, but it’s true in Southeast Asia.

So it seems to me that Facebook in particular has a huge problem in India, Myanmar or Sri Lanka, and a lot of places in Asia, and that they’re not really beginning to grapple with the problems that come with the platform.

Yeah, they’re having some trouble here too.


Grappling isn’t good.

This in a sense may be a secondary concern for them, given all of the Trump/Russia stuff. But nonetheless, they are being accused of being involved in exacerbating a genocide in Myanmar. No matter what else is on your plate, you do not want to be in the place of having sensible people ... The United Nations said the genocide in Myanmar has been demonstrably worse because of the way Facebook’s user platform ... And that is an enormous problem in anyone’s book.

Right, which is just being used as it’s designed. Let me just say.


Again and again.

No, and I mean it’s a very ...

It’s precisely how it’s designed.

I think it’s a very complicated picture. Maybe the same as here, but particularly in emerging Asia, which is the area I know, Facebook and WhatsApp, they have many positive elements. The consumer surplus from a service like WhatsApp, basically free, you get it for the price of your cheap data packet. In terms of helping people connect with one another, all the things that it says ...

Yeah, we know.

But that sort of stuff, that’s huge, when you’re poor and you haven’t been able to do that. When you’re living halfway across a country, you’re not able to speak to your relatives, for you it’s a different, more important, more significant thing than in the United States.

I don’t want to be seen just to be needlessly bashing them, but I really feel that Facebook has a big problem here. They don’t even have an office in Myanmar, a country in which they’re being accused of, in someway being involved in ...

Right. The massacres.

This is a country that has 55 percent margins. It’s a very, very profitable company.


They are not spending enough money on trying to grapple with the downsides that their platform provides, which are different in these countries than they are in the West.

Right. I doubt they were aware of them in the first place and now ... I think the reactions are the issue that most of us have with Facebook. The reaction is slow.

Yeah, and WhatsApp is, I think, a particular problem, because it’s such a lean organization. Facebook at least is, it’s sort of bulking up. I can see this month by month in Southeast Asia.


They’re hiring people in countries there. They’re trying to do their best. They could do more, but they’re at least moving in the right direction. But WhatsApp is a super-tiny, lean company built with engineers, and really nothing else.


My sense is, they are completely blindsided by what is going on in Myanmar at the moment.

What’s happening.


When you look at that, when you see that happening, has tech been a good thing for India? And then I want to talk a little about these billionaires. So ...

Yeah. No, no. For sure most of the things that technology can do is very helpful. Not just the communication. In a sense, the mobile phone was a miraculous device in India because it was — much more so than here, you went from a situation in which ...

Rural farmers, right?

Yeah. Nobody had anything.

No information.

No information. No nothing. And you went from a situation to that in which, still it’s not as if the entire population has smartphones, but you’re moving pretty quickly to a position in which you have ubiquitous mass communication. That doesn’t mean people are gonna use it in the same way that we are. It also doesn’t mean, you know ... Not very many people in India have credit cards yet. Nonetheless, the mobile phone has been a massively empowering tool. For poor people, for women.

But it would be naive to think that you slap this new set of technologies onto an emerging market, that is sort of complicated and difficult and has different religions and different cultures. It would be naive to think that all of this was gonna be good, and so there are some real problems. The tech companies are just not terribly good at dealing with this, because they don’t have that many people. They’re still kind of quite light. Most of their engineering talent is here in Silicon Valley. They have thin government affairs departments, they don’t invest in local operations, and so in the end, they get caught out when their services become immensely popular in Asia and get misused.

Right. How do you think Silicon Valley looks towards India right now? Obviously we have a lot of Indian expatriots here. We’ve got a lot of CEOs, a lot of founders, who have come and stayed here. How do you imagine the perception of it? There was that controversy when Marc Andreessen made that boneheaded remark about India, if you remember, couple years ago.

Silicon Valley companies have got to slightly watch their step in India. So Facebook, again, is the one that put its foot in it, tried to launch a service called Free Basics.

That’s right.

That was around the time that Marc Andreessen made his ... Yeah, he sort of talked about benign colonialism, and that, obviously, went down very badly.

“We love that East India Company.”

Yeah. They tried to launch this service called Free Basics, which was a sort of free internet, but that people said contravened net neutrality, and the Indians didn’t like this at all. There was a big backlash about it. Facebook tried to barrel through.

It was another one of these instance in which Mark Zuckerberg just came across as completely cloth-eared, basically tried to push forward, saying they were really doing the right thing for the right reasons, until the backlash became overwhelming. Then they had to have a humiliating climb-down.


In general ... I think for instance Google has done a reasonably good job. They have a better image, I think. In general I don’t think there’s a sort of sense that the Silicon Valley tech companies are a bad thing, as long as they don’t do things that are stupid.


That does tend to be in addition to this broader problem I’ve talked about with Facebook. They get into trouble, because the ones that are platforms for free speech are used by a mixture of nut cases and people who want to test the boundaries of what are often countries that are far from First Amendment, free speech environments. They get sort of wrapped up in that.

I have to say, I think often one can look quite benignly on the tech companies from that perspective. In a sense, often they are inadvertently challenging laws that are not great anyway. So they’re actually a sort of platform for expression: If you are gay, if you are untouchable in India, if you are denied a place in the public square, then that’s often where these companies actually have a reasonable role to play.

Right. Right. That idea of the Raj, it’s an interesting one. It’s sort of the old-school implications of colonialism, as we were talking about before, and new school. When you talk about these abuses, I’d love to know what’s gonna happen from here, after these have been created. If you have this sustained era of corruption, essentially, is what you’re talking about, talk a little bit about that. What are these billionaires like, then, with all this money, and how they got to where they got?

The Raj phrase, as some of your listeners may not know, the Raj was what the period of British colonialism was called.


It’s a Sanskrit word, rajah, which means rule or kingdom. This phrase is often used in India. In the socialist period, when the economy was closed, they had something called the license raj. This is how people used to know a world in which, if you were a company, there was a license or a quota, which said literally how many things you could make. If you made widgets or cars, you were only allowed to make 20,000, whatever it might be.


So that was the license raj. And so people talk about rajs, and that’s why I called it the billionaire raj.

Where does it go from here? Good question. I think India stands at an inflection point, where it has these fault lines that it has to deal with. One of which is the rise of the super rich and the fact that India is becoming much more unequal. One of which is crony capitalism. And another is the boom-and-bust model and its industrial investment cycle. And, I suppose, the argument that I make in the book is that there’s no reason to be pessimistic about this.

If you were to have sat in the middle of New York in 1880, in the height of the American Gilded Age, then you would have looked around and seen a country that had just the most delinquent class of super rich. Completely amoral. In it for themselves. Doing absolutely nothing ...

Lot of oyster eating.

Yeah exactly. Oyster eating.

Lot of shootings.

Mansion construction.

Yeah. Some nice houses.

Sort of general rape and pillage. They were working hand and blood with a political class that were as venal as anywhere in the world. You may well have been pretty pessimistic about America’s chances, but 10, 20, 30 years later, things began to look up for a whole range of reasons that people are aware of. A social of control over politics of middle classes ...

Well, it was because wars.

Well, that’s true. It’s never an easy picture. We moved from the Gilded Age to the Progressive Era, and history developed. There’s no reason why India shouldn’t be able to do that.

We also know from the example of the economies of East Asia that move from poverty through middle-income status, and then some of them to become rich economies like Korea or Taiwan, we know how to do this. And so there’s no real reason why India shouldn’t be able to follow. But it’s not gonna happen by accident. And that’s the ...

Right. Where you have a strong middle class in the middle. Right?

That’s right.

Because if you have just the super rich and the very poor, which I see developing in this country really easily, there’s certainly more and more distance between the top and the bottom.

I think that’s the alarming thing for India, that it’s become very, very unequal in the early stages of its development. If you want to become prosperous, you have build out the middle class. But you do that, really first job, before you start thinking about building out the middle class, which is quite a rich world conception. You’re talking about moving farmers into the lower working classes, and then upwards. So in a sense, half of the people in India still work on the land.

That’s astonishing.

As was true in the United States before the Civil War. And so that’s the sort of task that you’re talking about. Bulking up the middle class in the cities, and India is about to undergo the most astonishing process of organization ... Since China just did the same thing. But the second most impressive movement of people in human history. So some 300 million people are gonna move from villages into some sort of urban center over the next 20 or 30 year.

Yeah. I just saw a really fascinating statistic, that 70 percent of people will be living in cities here in the United States in the next 50 years, or something like that. But 70 percent of the voting will be among the rural area. You know what I mean? The people that aren’t there will have much of the voting power and they happen to be all old white men, which was fascinating. Which was really, whoa.

That’s interesting because that’s very similar in India. One of the problems that India has is its politics are still very oriented to the villages. And so that means you go to a city like Bangalore, which some of your listeners will have been to. It’s the tech capital. It’s the home to many of these unicorns. It’s got an amazing deep bench of engineering talent. Feels a lot like San Francisco in many ways because it’s still very unequal, there’s still slums. But you’ve got a lot of people riding around on micro scooters and that sort of thing. You have the real accoutrements ...

For anyone who’s never been to India, the disconnect is so strong, there’s such modernity and such not, it’s a really, it’s really fascinating to me.

But Bangalore’s a sort of classic example, because in addition to the poverty which would catch your eye, it has terrible politics. I mean, just run by complete scoundrels, and it’s true of almost all Indian cities. But Bangalore is particularly bad because you also there have a reasonable urban middle class of people who are very globally connected and responsible and somehow they’re not able to wrestle control of politics away from the bad guys.

And at the same time, all of the money still goes out, such money as there is, goes out towards the villages. Now that’s not necessarily a bad thing. I mean, in a sense, money may well follow, go to the people who really need it. But it does mean that you leave a city like Bangalore, which should be one of the beating hearts of your economy with pretty terrible infrastructure. So you compare Bangalore to, I don’t know, Shenzhen, and it’s just a disaster.

Which has seen huge development.

Yeah they’ve just about been able to cobble together an urban rail system. The traffic in Bangalore is just almost, I mean, it must be — along with Jakarta and Manila — it’s the worst traffic in the whole world. It’s just appallingly bad, and that’s because the governance of the place is very problematic.

And so that’s ... they used to say of the tech sector in the 1990s, they used to say it grows at night. And that was the sort of famous phrase which meant that the only reason why India was able to develop this world-leading technology sector was the government wasn’t really noticing. It just sort of happened while no one was looking.

I do remember being there, writing a variety of stories about tech in India and having to visit a minister and I ... it was like 20 ministers to get to the one minister who’s just like essentially a mayor. He wasn’t even a big minister, it was kind of fascinating. And I remember sitting in the office waiting and waiting and waiting, just cooling my heels. And I said, “I bet I can reach Bill Gates faster than this guy.” And I reached Bill Gates faster. I emailed him and he wrote back, but it was really fascinating. And then I showed the ministers. I said, “Look, Bill Gates moves faster than you.”

In one sense, this is a reason for ... to some degree you can look at this optimistically and say, well, look at what India has managed to achieve given all of these constraints, but that’s not actually the story that you want, right? The reason why India is lagging China is because you have world class tech talent, interesting business models, great opportunities, but they are held back by the political system, the lack of infrastructure and the sort of development stage of the country.

And not very good billionaires, apparently.

That’s true. That also doesn’t help.

Bad billionaires. I like your bad versus good. I think they’re all bad.

But let’s finish up talking about where they go from here. You have this period of growth and then you have this period of corruption. Where does it go from here? Where do you see ... Like now you have all these people who are very wealthy, these super rich, interested in keeping the status quo, presumably. What happens to an economy like this? What has to happen?

Well, with luck, what happens is what happened in eastern Asia, which is that you introduce a whole range of political reforms, some of which are targeted at the super rich. So as I say, you make sure people pay their taxes, you make sure they’re responsible. Otherwise very few people in India pay taxes at the moment. You try and find ways to stop crony capitalism so that those people who do become rich do so because they are ...


They’re innovative, they’re sort of appropriately rewarded for creating jobs, creating value. And then you put a big effort into the people at the bottom. That’s an area where India is badly lacking.

So if you look at a country like Malaysia or Taiwan, they put a lot of effort into schools and hospitals, basic pensions for old people. You create ... this is not a European-style social welfare system, but this is a system where people who live often rather fragile existences have some degree of social support so that they can go and kind of take risks, move to where the jobs are. That’s the sort of thing that India needs to do, and it needs to clean up its politics and invest in a decent government.

Where are those politics going? Because it seems rather authoritarian, and populism, right, under Modi. Correct?

Yeah. So Narendra Modi is sort of, he’s a right-wing Hindu nationalist. He’s a contradictory figure because he is business-friendly and anti-corruption notionally, although his record has been a bit mixed. But on the other hand, his party, it’s a bit like the Republican Party of old, before Trump, when you had the Christian coalition and the Rockefeller Republicans. And so he sort of brings together those two strains in Indian life: The part of the center-right that is pro business, but the part of the center-right that is also a right-wing nationalist.

So if you’re an Indian liberal, actually most people in business are quite pro-Modi, the tech sector I think as well, most of them probably quite like the BJP, which is his party. But if you’re an Indian liberal, secular liberal, so the values in the Indian constitution, which was written in 1947, are not that different from the American constitution, they’re liberal and secular. All the people of the country, many diverse faiths live together. Those sorts of people who still believe in that, which includes me as an outsider. I tend to be slightly worried about the direction that Modi may be taking the country in.

Slightly worried because?

Because he, and in particular those around him, do not believe in India as a secular, multiracial society. They believe in a Hindu nation in which Hindus are top dogs and Muslims in particular are sort of lesser dogs, as it were. It’s not the right phrase to use. And so that’s rather alarming because India does have a heritage of communal violence and rioting and all sorts of things, and those of us ... You know, there’s a moral reason for thinking that all people have equal worth, but equally if you want to develop, you want to have stability and allow people to invest, and many of us think that the old Indian system that is sort of secular in which minorities feel secure is more likely to be the system that will help people, help India on its development path.

Right. And to finish up, where do you think the next billionaires are coming from?

Well, that’s a great question. I hope that you will see a gradual shift in wealth creation. Two things can happen. Firstly, some of the existing billionaires who we might put in the bad billionaire camp are getting drawn towards the sort of cleaner parts of the economy. So one example would be more Mukesh Ambani, who’s India’s richest man.

What did he make?

His ridiculous billion dollar house is on the front cover of my book. He has this — I call it the billion dollar house, it’s a 170-meter skyscraper in downtown Mumbai that he built for him and his wife and his three kids.

A skyscraper?


He lives in a skyscraper?

He does.

What is he, Trump?

I’m going to show you the picture now on the front cover of the book. So it’s an extraordinary looking building. It’s called Antilia.

So he has the top part?

No, he has the whole thing.

What’s he doing in the whole thing?

I don’t know. He’s got a lot of apartments, got six floors of parking. There’s a nice roof deck at the top. It’s an extraordinary building and it became a kind of icon of what I call India’s Gilded Age. But Ambani has just spent a god-awful amount of money investing in a new telecoms outfit called Reliance Geo. It’s a greenfield, 4G, super-fast new network that he built, because his background is in oil refining and various types of heavy industry, but he decided that his company needed to be more on the consumer side of the economy. He basically wanted to be a kind of tech guy. He wanted to be the sort of person who could turn up in Silicon Valley and be treated like Jack Ma or Mark Zuckerberg.

There really isn’t one, is there?

Yeah. I don’t think he’s going to play that role because he has too much of a checkered heritage, but in a sense he has been drawn into this new emerging kind of consumer tech economy. And that’s not a bad thing, in a sense. Whatever you think about Mukesh Ambani, I’m pretty critical of him in the book, the fact that he has sunk all this money into a pretty good new 4G network is very good for India.

The bad billionaires will make good investments.

That will happen. Then you will see that the cleaner parts of the economy simply attract more people. So that is partly tech. You will see a number of billionaires, people like Vijay Shekhar Sharma, who’s the guy who runs this Paytm company, which is the one that’s most equivalent to Ant Financial in China. He’s now a tech billionaire. You’re seeing a kind of new generation of tech billionaires coming up from the startup scene that was getting investment three or four years ago. That’s great. But that’s not the only example. I mean, consumer services, private sector, financial services, so India’s financial system is very state-dominated, but there are banks and fintech startups and that sort of thing.


Yeah, God knows, blockchain, you know about that, I never really understood it, but I think you will see ... I think India is going to remain a very unequal society. And so the hope must be that more of that wealth is coming from entrepreneurially generated new money. Entrepreneurs who start out with nothing and make it on their own broadly, honestly. And you gradually just see the sort of, the people in what I call the billionaire raj are shrinking in importance over time.

All right. And was there a favorite billionaire? Obviously this guy with this skyscraper house.

That’s right. So I think Mukesh Ambani, if one figure embodies the sort of excess of the billionaire raj, then it’s him and it’s that house.

Is he like Elon Musk level?

Elon Musk is interesting because he in a sense is the closest that you get in the modern Western economy to maybe Richard Branson, in a kind of slightly less interesting way. He has that buccaneering spirit. When I first moved to Mumbai, the reason why I was captivated by these guys is it’s a form of capitalism that we just don’t have any more. This really is a 19th century form of capitalism.

And so Mukesh Ambani invested $30 billion in this network. He’s never going to make that money back. I mean, it’s a mad investment. He’s doing it for various complicated reasons of his own. But in a sense, there’s something rather kind of admirable about that, like what’s the point of being a tycoon if you don’t make crazy crazy kind of nation-building investments, right?

I completely agree.

There’s nothing worse than being a kind of gutless tycoon. What’s the point of that?

Non-creative billionaires. I go around to many of them I know and I’m like, “You’re a dull billionaire.”

Yeah, exactly. What’s the point of ...

I would have a lair. What would you have? I’d have a lair.

Yeah, I think so. Some sort of ... Well, he has a sub-basement in this house in which he’s got an indoor football pitch.

Obviously have an army.

You’d have some goons?

Some goons? I would have a lot of goons. There would be goons everywhere.

You’d rough up your enemies. I mean, all sorts of fun you could have.

Rough up, if you want to use that euphemism, certainly. I would have invisible planes. I’d have the British secret service after me.

In addition to your fetching aviator sunglasses, you could have a bat suit of some sort with some special power.

All of it. All of it.

At the Swisher mansion.

Yeah, that’s right. The Swisher mansion. No, I wouldn’t have a big house. It’s ridiculous. Your conclusion here is, overall?

My conclusion is, India is not Russia. There’s a lot of reasons to be optimistic about the Indian economy and a lot of people in this country are going to continue investing in India and in Indian tech, given that’s what we’re talking about. But India’s path, it’s not going to happen magically and by accident. And so in a sense you need sensible political reforms to do, to some degree, to do what China did.

You’re optimistic on that?

Yeah, moderately so, at least in theory. I mean, India is damn complicated so it’s always hard to say. But I came to love India when I lived there and I wish it well and I see no particular reason why it shouldn’t prosper.

Singapore’s a little different.

Singapore is a little bit different.

Do you like it there?

I do. Yeah, it’s a great place to raise kids. I think it’s not somewhere that you feel affection for in quite the same way as you do with India. As a foreign correspondent I think India is every foreign correspondent’s dream posting. It’s just such a fascinating place.

How is Ola doing?

Reasonably well.

They’re going to cut up the world, they’re all going to cut up the world together.

In the end, SoftBank is going to kind of decide who gets what, right?

That’s right.

So Uber sold out in Singapore, so we don’t have that in Singapore anymore, we’ve just got Grab. But it looks like they’re going to stick out for a while in India. I wouldn’t be at all surprised in the end if Uber just decided that India was too much bother and that they do exactly the same thing as they’ve done anywhere else. But at the moment it looks like they’ve decided, I presume that the potential upside of the Indian market is so huge ...

That they don’t want to do a deal yet?

Well, that it is more important to have that in the investor presentation for the IPO than to take it out. I presume.

Yeah, that’s a fair point. Yeah. We’ll see where that goes. Anyway, thank you so much, James. This is James Crabtree, he’s written a book called “The Billionaire Raj.” I do like that book, the apartment. Did you go see it?

I used to drive by it every day.

Did you go up in it?

No, no. I’ve never been invited.

Got to get inside their houses.

I’ve been inside almost every other one of these guys’ houses, but this one is very resistant to outsiders.

Yeah I was just in a billionaire house. It was nice, I’ll tell you that. I immediately was escorted out, but it was nice while I was there.

Anyway, it was great talking to you, James. Thanks for coming on the show.

Thanks a lot.

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