Published on: 18 Jan, 2019

Intensely researched, well thought through non-consensus opinions are priceless. VS Naipaul’s final book on India is an example of such work. Meticulously researched, Naipaul’s 1990 book flagged that India was a country on the move and on the make. At a time when the norm was to berate India for its many  failures, Naipaul had the courage and the conviction to tell the world that India was healing after seven hundred years of subjugation.    

“Now there were many revolutions within that revolution…All over India scores of particularities that had been frozen by foreign rule, or by poverty or lack of opportunity or abjectness had begun to flow again.”VS Naipaul in ‘India: A Million Mutinies Now’ (1990)

Naipaul was a special talent….
In last week’s piece we discussed how we as investors need to balance the rational and the emotional especially since most of our formal training focuses on analysing rational inputs whilst ignoring the emotional stimuli that all of us are being relentlessly subjected to. Nobel Laureate VS Naipaul’s great strength was that as an accomplished author of fiction & non-fiction books (a rare combination) his senses were as tuned into emotional stimuli as they were to rational facts & figures.

Sir Vidiadhar Surajprasad Naipaul (1932-2018), although a Trinidadian by birth and British by nationality understood India in a way few foreigners can, both, because of his family’s Indian origins (he grandfather had migrated from India to Trinidad as an indentured labourer) and because of his repeated trips to India. The combination of all this gave birth to a remarkable book in 1990 – ‘India: A Million Mutinies Now’. The book not only not only foresaw India’s economic rebirth and social churn in the coming 20 years, it was and remains the most accurate, the most revealing narrative of India ever written, as relevant today as it was in 1990.

….and produced a special book
Over the course of 1988 & 1989, Naipaul travelled across India, starting in Mumbai and then moving in an anti-clockwise direction across the country, eventually ending up in Kashmir. During the journey he met and interviewed criminal gang leaders in Bombay, Hindu and Muslim extremists, a leader of the Dalit Panthers, Naxalites and their police torturers in Chennai, Sikh terrorists, stockbrokers, government clerks, politicians, filmmakers and, of course, god men. The interviews with these men are interesting but by itself the content of the interviews would not surprise “natives” of India.

The astounding thing is how Naipaul joined up these interviews to produce conclusions that no one else had ever come up with. Even though most of the people he met give him the standard Indian bylines – that “India had changed; it was not the good and stable country it had once been”; that “the great investment in development over three or four decades had led only to this: to ‘corruption,’ to the ‘criminalization of politics’ – Naipaul joined the dots very differently. His takeaway (which is as relevant today as it was in 1990) is:

“The book was dedicated to a further idea: that India was, in the simplest way, on the move; that all over the vast country, men and women had moved out of the cramped ways and expectations of their parents and grandparents, and were expecting more. This was the “million mutinies” of the title…’ – VS Naipaul [Source: https://www.theguardian.com/books/2007/mar/10/fiction.vsnaipaul/

This core point of the book was that a mighty country was on the move, a fractured land had been able to over the last hundred years, with steady acceleration, define and regenerate itself. This message has several facets which are teased out in the book, for example the rise of the Dalits, the rise of feminism, the willingness of Indians to migrate from one part of the country to another in search of a higher incomes, the aspirations of small businessmen to build something bigger, the flaming out of Naxalism, etc. Consider the following paragraph (from Chapter 3 of the book):
“People had a little bit more money now. It showed in the Karnataka countryside on the road to Goa. Indian poverty was still visible…But the fields, of sugar-cane and cotton and other crops, looked rich and well-tended; the village houses were often neat with plastered walls and red-tile roofs. There was nothing like the destitution I had seen 26 years before…”

Why was Naipaul able to see what no one else could?
Whether in 1990 or in 2020, the standard view on India – given by residents and visitors, Indians and non-Indians – is that things are falling apart, that progress is glacial, that the country is riven by corruption, that democracy is a massive drag on development, that India for all its promise will ultimately not amount to much, etc.

Naipaul was able to come up with a non-consensus view on India through a mixture of skill and hard work. Writing in 2007, when India was being celebrated as a boom country, he says:
“This seems a reasonable thing to say now, in 2007, at the time of an acknowledged Indian boom. It was different in 1988, when I began the book. India was full of a pietistic Gandhian gloom, self-satisfied and rather happy as this kind of gloom often is in India. The talk among the talkers in the towns was of degeneracy, a falling away from the standards of earlier times: politics were being criminalised, and there was corruption everywhere. Standard stuff, not profound, not based on any real knowledge of the country; but it could undermine one. It was the background against which I worked out my idea of the mutinies… The idea didn’t come to me out of the air. I had done a lot of hard travelling in India in the past 26 years…I had picked up a more varied knowledge of the country than most Indians, who were bound to their families and jobs. I had spent many weeks in the districts, away from the big towns…” [Source: https://www.theguardian.com/books/2007/mar/10/fiction.vsnaipaul]

Alongside his highly developed powers of observation (honed in the prior decades by writing books on Africa and South America based on extensive travels in those continents) his sheer hard work helped Naipaul perceive India in a way no one else ever had even though he was an outsider. As a result, Naipaul had all the information of an insider with few of the biases and prejudices which insiders have. In his words, “…I had to deal first of all with my ancestral land, India. I was not an insider, even after many months of travel; nor could I consider myself an outsider: India and the idea of India had always been important to me. So I was always divided about India, and found it hard to say a final word.” [Source: https://www.theguardian.com/books/2007/mar/10/fiction.vsnaipaul]

Investment implications
If we can bring to the table even 50% of the skill, the informed perspective and sheer industry that VS Naipaul had, we should be able to come up with uniquely valuable insights. In the context of our lives, our takeaways from Naipaul’s method of investigation is:

  1. The superficial aspects of what makes a company unique can be understood in a few hours but it takes months, sometimes years, of research to understand what is the real sustainable competitive advantage of a company.
    2. We have to go off the beaten trail and dig deeper than others if we aspire to uncover fresh perspectives. So it is not just good enough to meet customers, suppliers and distributors of listed companies, we have to find even more unique perspectives on listed companies. Drinks & dinner with the retired CEO of a rival company might provide more useful insights that the usual channel checks that most investors now conduct.
  2. When we do meet the usual suspects (company management, customers, suppliers and distributors of listed companies) we have to ask ourselves whether there are alternative ways to join the dots. So, if for example, our sources are saying that the “two wheeler market is saturated”, it might well be that the purchasing power of a key customer segment is maxed out for now rather than demand being satiated in the market.
  3. Rather than repeatedly making the same analyst in our team – the so called ‘sector expert’ – opine on that sector, we are better off by asking analysts to rotate across sectors so that we get the insider-outsider perspective that Naipaul had.
  4. We have to recognise that there is no substitute for experience. However, bright we might be, we can’t possibly understand HDFC Bank better than someone who is as bright as us, works as hard us as but has known HDFC Bank for twice as long. So dollops are humility are called for as we navigate our portfolios through the Indian market.
  5. And finally, we at Marcellus have to be cognisant that we too are one of India’s million mutinies. Not only are we a “challenger” firm, we are part of a generation that is challenging preconceived notions of India inside and outside the country. As a gentleman called Pravas tells Naipaul in Chapter 3 of the book: “My son will go through a very large change in circumstances in many ways. In the family, in the school surroundings, in the job market, everywhere. I grew up in a half ritualistic background. My son will have no ritualistic background…There will be many like him. Society is moving that way.”

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Saurabh Mukherjea is the author of “The Unusual Billionaires” and “Coffee Can Investing: the Low Risk Route to Stupendous Wealth”.

Note: the above material is neither investment research, nor investment advice. Marcellus does not seek payment for or business from this email in any shape or form. Marcellus Investment Managers is regulated by the Securities and Exchange Board of India as a provider of Portfolio Management Services and as an Investment Advisor.

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