Dr Prannoy Roy, Writer Ruchir Sharma On 2020's Top 10 Trends: Full Transcript

America dominated like never before during the years, they said, adding the country's share in the world economy went up to a whopping 25 per cent.

Dr Prannoy Roy talks to Ruchir Sharma about the world and the economy

New Delhi:

Writer-analyst Ruchir Sharma and NDTV's Dr Prannoy Roy discussed the top 10 trends of the decade to come. In the discussion, they said the 2010-19 decade belonged to the US. The US dominated like never before during the years, they said, adding the country's share in the world economy went up to a whopping 25 per cent. They also mentioned China's contribution to the global economy, which went from 9 to 16 per cent.

Here is the full transcript of the show:

NDTV: Hello and welcome to one of my most favourite programmes of the year and one for which we at NDTV get a lot of positive feedback. I'm of course talking about the Ruchir Sharma show where he forecasts what's going to happen to the economy and the world in the next year. And how should all of us avoid the dangers that lie ahead and take advantage of the good spots that lie ahead? The big difference with Ruchir's show is that it's all based on solid research and analysis, deep, deep data analytics. Believe me.

Which is what makes him also one of the most successful people on Wall Street. He's also a very, very successful author of several books, including some on The New York Times bestseller list. In fact, Ruchir wrote a great book on Indian elections, called 'Democracy on the Road'. And mark this, he has a new book coming out, 'The 10 Rules of Successful Nations' coming out soon. Today's programme is a little different from the earlier ones. Instead of looking ahead at just next year, Ruchir will forecast the big changes that are likely to happen in the next decade, the 2020s. All these forecasts are based on trends that happened in the decade that just ended. Ruchir, so you're linking what you've learned from the last decade and basing your forecast of what's going to happen or not going to happen based on that?

Ruchir Sharma: You know Prannoy, one of the most fascinating things that I've found in all our research is that there is a very strong decadal pattern that if you look at post-World War 2 history, that you find that trends are often defined by a decade and even though at the turn of a decade it does not mean that a trend needs to change just because the calendar changes. But it's amazing that how that has happened so often.

NDTV: Right

Ruchir Sharma: Sometimes it's just coincidence and sometimes it's for some fundamental reason that there's some event that takes place in the world where the trend seems to change. So last decade you had the 2008 global financial crisis that marked a huge shift.

NDTV: Right

Ruchir Sharma: The decade before that, you had the tech boom bust cycle that happened right at the turn of the decade.

NDTV: Right

Ruchir Sharma: And the decade before that, again, in Japan that the Japanese bubble burst.

NDTV: Right

Ruchir Sharma: And the starting of the bubble happened starting on the 1st of January, 1990.

NDTV: So, you basically learn from all these changes that you've seen in the past and you and your forecast you're going to link the two, the two tens with the two twenties, is that right?

Ruchir Sharma: Yes, so there are some things which we'll continue. Yes. But more often than not, the trend changes or it evolves. And I think that's what we're going to focus on today and why we are doing a decadal run today rather than a yearly run.

NDTV: Great. And what the basic thing is that we are going to go through so much ground because we've got 10 years. So, let's get started and go through each of the 10 major trends that are going to happen in the next decade, the 2020s.

Ruchir Sharma: Yes

NDTV: The first one and this all 2020s will be based on trends that happened on the 2010s. Let's have a look at the first trend. 2010s was America's Decade, according to Ruchir. Well, according to data, actually, America's share of the world economy, just look at this, increased to 25%. It went up when many people thought that was going to be the end of America. America's share of the world economy went up to 25%. Compare that with Europe. It fell sharply to 15% of the world economy. The whole of Europe, 15% share of the world economy. China surged from around 9% to 16%, almost doubling. Huge surge in China and India inched up from about 2.7, 2.8 to 3.4. But it inched up, so, but it was America's decade. Moving on if you look at the impact of this. For example, look at what America's decade meant for returns in financial terms as a financial superpower, America dominated like never before in the 2010, 2010 to 2019. The returns in America, the gains you made on the stock market was two hundred and fifty six percent in that decade. Right, Ruchir?

Ruchir Sharma: Yes

NDTV: And next Europe, you think 75? That is huge. What a difference.

Ruchir Sharma: Exactly. I think that that for me is the key distinguishing factor, which is that, as you mentioned, that even China's GDP surged from 9 to 16.

NDTV: Right.

Ruchir Sharma: But what made this truly America's decade is that as a financial superpower, America never sort of dominated this as it has come to be as ...

NDTV: This is amazing

Ruchir Sharma: ...and as a result, today, the American stock market alone is 56% of

NDTV: ...the world's stock market

Ruchir Sharma: ...the world's stock market value. So that is a new high for America. So, its economy is 25, but its stock market is 56% of the global stock market value.

NDTV: You're speaking. The China figures you brought up are 72%. That's just more less than one third of America and emerging markets in India 49% in India, around 46% increase in the whole decade. So, huge dominance by America. It's amazing, amazing to know everybody, okay, America's done well, but this kind of dominance is startling from those data.

Ruchir Sharma: Right. And I'll just make one more point here regarding India's data as well. That in dollar terms, as you can see, the returns were just not that impressive this decade. It's very different from what happened in the previous decade. Oh, I see. And even for the domestic investors, the domestic investor in India doesn't care much about dollar returns. They cared much more about it. How much that they are sort of getting diabetes. Yes. But a very important point here, and that's why the dollar returns. It also so much lower that, in India, inflation was relatively high. So even though it optically it appears to good returns, but the returns will go to the Sensex, doubled in value in some way over this entire decade of 2010s. The Nifty did so well in nominal terms. But if you look at it in real terms, inflation adjusted terms, the annual returns in the stock market in India were less than 5% a year. That's it. That's it. Way lower than what we had in the previous decade. And obviously, as far as America is concerned, because inflation that is so low, the real returns in America were very close to the nominal changes. What you got in India. So that was the big difference in terms of the return profile you were mentioning.

NDTV: Very interesting finding, again, that each decade there's a different kind of a winner. The big winners in each decade, just have a look at the big winners of the last 50 years. Every decade had a big winner and a different one from one decade to the next. The decade of the 1950s belong to Europe. The 1960s belonged to United States. The 1970s, basically commodities rule the rule the way of the 1980s. Japan can hardly remember that. But my gosh, they did very well. 1990s was back to the USA. That's four decades later and then 2000s emerging markets. That's because you are handling emerging markets. Right. Some coincidence that 2010 back to USA. So, yes, he's got three top spots there. 2010, we just saw a huge dominance. And now we're going to look ahead based on these. Who's going to decay? Who's going to dominate the 2020s?

Ruchir Sharma: Yes. And I'll make one point here about. What exactly do I mean by this in terms of domination? Yes. In all these instances, these markets went up by roughly about five to 10 times, while in this decade, well, so a massive amount of gains to be made. And also, the fact that by the end of the decade, it got very euphoric. Everyone thought that this trend was going to continue. And then in the subsequent decades, we will see that all these trends basically faltered. Good expectations got too high. Complacency built in these countries which were doing so well. Japan, as you mentioned, that it in 1989 at the peak of that bubble. Right. The Japanese stock market was 45% of the world's stock market value. My car, 45%. So, this is what happens that you get bubbles, which build up by the end of the decade often, not every time, but you do. And this is what this tells you. That is one team which captures the imagination of the world every decade.

NDTV: And that question mark, if you know who's going to be the next one. You could gain 5 to 10 percent. So, this idea came flying at five to ten times. So, 5 to 10 percent. That's for every week for him. Okay, you know, the interesting point you also make Ruchir, is that who dominates the person that dominates one decade? If you just have a look how they just kind of collapse in the next decade. You were talking about a bubble. So, the big winner in one decade becomes a big loser in the next decade. Just have a look at the data that ...

Ruchir Sharma: ... is not the winner decade.

NDTV: But it won't be America. Yes, that's a big thing to say because 56% of the stock market ...

Ruchir Sharma: Yes, because it all feels the best at the peak. Things are going really well. America today, this is the longest economic expansion in America's history, which goes back nearly 200 years in terms of data. Yes.

NDTV: Right, right

Ruchir Sharma: The unemployment rate in America today is at a 50 year low. So the whole idea is that this is about as good as it gets as far as America is concerned and at some point in time in the next year or two, when you have the next recession in America, I think that's when things will change and the rest of the world will emerge stronger after that, because so many countries, from Europe to India and even Japan, they're doing, they're being forced to clean up the mess of the last decade that has been created here. Once that is done then those countries will be in a better position to start doing ...

NDTV: I think, what is so amazing about this kind of analysis is that this is the time when everyone thinks America is doing great, just focus on America, go for it, but you show that at its peak you should worry.

Ruchir Sharma: Yes, because remember if we had done this show a decade ago, and that's really what, and we did sort of speak about this and I wrote about this extensively, at that point of time the world was crazy after emerging markets. BRICS were supposed to dominate the world.

NDTV: That's because you were in charge of emerging markets

Ruchir Sharma: So, they were supposed to dominate the world.

NDTV: You misled everybody.

Ruchir Sharma: All the projections were ...

NDTV: No but you did

Ruchir Sharma: ...a linear ...

NDTV: You've always been bullish about America in this decade.

Ruchir Sharma: Yes, that's right.

NDTV: That's against the trend.

Ruchir Sharma: That was my basic conclusion when I wrote my first book Breakout Nations which is that I was very sceptical of the BRICS domination and though America, because of its technological prowess, could be the winner of this decade.

NDTV: Right, right.

Ruchir Sharma: I wish I had followed my own advice more but now we, here we are.

NDTV: Everybody follows your advice and you don't follow your own. Chalo theek hai, I understand. Let's go on to the second top trend of the 2020s. Now that's to do with big companies. First let's link it with what happened in the 2010s, the last decade that's just completing. Big companies got bigger and bigger. Look at the share of the top ten companies and how it grew from 2010 to 2019. From 9% to 14%. Now, that is actually a huge increase in real terms.

Ruchir Sharma: This is the share of the world stock markets. That the top 10 companies were 9% in terms of their value of the global stock markets, now it's at 14%. This is back to close to the highs we saw at the peak of the tech bubble in 1998, 2000 when a handful of companies dominated.

NDTV: Right

Ruchir Sharma: In India, too, the large companies got larger, especially in the last three years. And the top 10 companies in India, in fact, today they are 55% of India's stock market capitalization, so also very big in India. But in India the difference is that in India, it's always been the case. It's gone up in the last three years. But generally, the top 10 have dominated

NDTV: Dominated much more than the rest of the world.

Ruchir Sharma: Yes, the rest of the world, even the rest of the emerging markets on average. But now in the world also, we have seen this increase where the top 10 companies are dominating ...

NDTV: Does that mean that there's more inequality in India? If the top 10 are doing so well, so much higher?

Ruchir Sharma: That's right. That is a sort of one of the effects of that. But we will come to that in greater detail in terms of what exactly does that mean in terms of rising inequality.

NDTV: Right. So, let's move on to what this actually means in terms of what happens in the next decade, two companies that have done well. Just have a look at this. Top 10 stocks of any decade actually struggle in the next decade. I mean, that's a huge change. Look, for example, what happens in the percentage gain of the top 10 stocks in one decade? Two thousand one hundred percent gain in a decade. That... to be a top ten, you have to have that type of thing. But the next decade, just a 65 percent gain, the same stocks, two thousand one hundred percent down to sixty five percent. So, one has to be very careful of just saying, oh, it's doing so well, let's invest in it, because the tendency is, you're doing terrifically, you're going to collapse in the next decade.

Ruchir Sharma: So, the two thousand one hundred number here is important to explain, which is that this is about the top 10 companies today, which are, like in the world, like how much have they gained.

NDTV: Yes.

Ruchir Sharma: But the important thing is that nine out of these companies were not there in the top 10 at the beginning of the decade.

NDTV: Right. Right.

Ruchir Sharma: And so therefore, this gain is huge. But once you're in the top 10 at the end of a decade then the subsequent decade, this goes back again to my big theme of this discussion that we're having today, that the winners of one decade are really the winners of the subsequent decade?

NDTV: Are the losers of the subsequent decade.

Ruchir Sharma: Yes. In terms of that, they end up becoming losers, in fact, are really the winners at both a country level and at a stock level we see this pattern

NDTV: We see this back to, actually not, in the next bit of data issue is really an eye opener for me. Let's have a look at the top 10 companies over the last five decades. And you just see the churn, Churn is the norm. If you're in the top 10 company in one decade, rarely if ever one in 10 chance of being in the top 10 in the next decade. Top 10 companies one decade are almost completely different in the next decade. Look at 30 years ago, Exxon Mobile, Wal-Mart etc. and then 20 years ago. Very few left, Microsoft enters, and Wal-Mart is the only one that's still there.

Ruchir Sharma: And General Electric, just two companies.

NDTV: Two companies left. Then ten years ago basically its Microsoft still there. So that is then. Today completely different lot, but Microsoft. So Microsoft three decades and frankly this decade it.s been in the top 10. Because of Satya Nadella.

Ruchir Sharma: Right.

NDTV: It was plummeting down to a 300 billion and he's brought it up to 800 billion. Some of the you know, the figures better, but something like that.

Ruchir Sharma: Yes, but you can see the churn here, which is that. Yes, I think a lot of people are really surprised by this, which is that at that of the top 10 companies in the world today, nine out of these top 10 were not there in the top 10 in the beginning of this decade.

NDTV: That's easy.

Ruchir Sharma: Incredible amount of gain. And some of these companies wouldn't have even been in the top 100 of the rankings at the beginning of this decade. That's how significant the gains have been. But, also a cost of the concern because many of them now are quite expensive after having appreciated so significantly this decade. And they also sort of have to deal with obsolescence that comes about in some of these industries.

NDTV: Right. I think the fascinating thing is that one out of 10 survives in the top 10. I mean.

Ruchir Sharma: In any following decade. That's right.

NDTV: It is just amazing churn. Now, those are the big companies. What about the smaller companies? Are they likely to do, well, badly Ruchir? Let's have a look at what you say about that. Small companies, in fact, you say are likely to rebound in the USA and where the U.S. is a signal for the rest of the world will come. But small companies have rarely been so depressed compared to large companies relatively. Just look at this. The percentage gain of large companies versus small companies, large companies in America gained 230 percent. Small companies 110. That is less than half. And in India, let's have a look at what happened in India in this last decade. Large companies gained 115%, small companies 6%. So that, rather than worrying, is a signal, because small companies, large companies historically have done. In fact, often small companies better than larger companies. But this decade so bad. Yes. You feel they could rebound?

Ruchir Sharma: Yes. Because one thing we also look at this, is more from investing perspective, are valuations.

NDTV: Right.

Ruchir Sharma: The point here is that the valuations of these small companies, not just in the USA, but in emerging markets in India.

NDTV: Right.

Ruchir Sharma: The valuations of these small companies relative to the large companies today is also quite depressed. Compare to the history that we look at.

NDTV: Yes.

Ruchir Sharma: I think that's another fundamental case to be made as to why small companies could do better. Now, there are other reasons too. It just won't happen because of valuations. It's also because I think the business environment could get more conducive for small companies. It could be easier given the platforms you have today, whether it's Amazon, others or the large companies or the platforms also provide some small companies to gain market share more rapidly. You do a search for a catch-up company ...

NDTV: Small companies like NDTV and all, and it's large companies like Morgan Stanley

Ruchir Sharma: Right.

NDTV: Sorry cut that. Large companies around the world will not do so well. It may not ...

Ruchir Sharma: ...on a relatively relative basis.

NDTV: Yes. So, let's look at the second of the top 10 trends for the 2020s for this coming decade. Number two, let's have a look at what it says, new big companies likely to emerge, the existing top 10 are unlikely to be there in the next decade. And smaller companies may be beautiful again. Small may be beautiful again. That's lovely. So, it's just a return to what has been in the past. I mean, this depression of smaller companies is unusual.

Ruchir Sharma: Yes, that's right.

NDTV: Really bad.

Ruchir Sharma: So I think there are two parts to this. One of the top ten will, if history is any guide. When we do this show 10 years from now and we look at the top 10 companies. Nine out of ...

NDTV: Don't worry!! we will just say tick, tick. We got all right.

Ruchir Sharma: 9 out of the top 10 companies are likely to be different than the list we see today. If history is any guide and similarly, I think that a lot of small companies is where the winners will emerge more compared to the large cohort.

NDTV: Right. Let's now look at your third top trend of the 10 and that's about tech companies, how they've really ruled the roost in the 2000, in the past decade, 2010s. Tech stocks really ruled in 2020s. So, let's have a look, global stock market returns, or gains if you'd like to say, Technology shares gained 325% in that decade. Let's have a look at the next one, Consumer Goods, way lower, 200%. Financial firms, 100%; Wall Street didn't do too well, huh? And Commodities, which used to, we had a decade of commodities, if you remember that chart, just gave returns of 30%. That is really a big change.

Ruchir Sharma: And I think that people sort of forget, but if you go back and read all the financial literature from a decade ago, people were saying the opposite.

NDTV: Really?

Ruchir Sharma: Like the consensus was that we are in a commodity super-cycle; that commodity prices have to increase. The world has ...

NDTV: Commodities, explain what they are

Ruchir Sharma: Oil, Copper, Aluminium. Those were the hot companies of the 2000, and 2010. That decade.

NDTV: 2000 to 2010. Correct.

Ruchir Sharma: Yes, that's right. And now what we've seen is that it's been a complete flip. The same chart in 2010 would've looked the opposite, commodity companies up 3 to 4 times and tech firms would've done nothing. So, churn is the norm, is again the message when you look at the world from an industry perspective.

NDTV: And in fact, as you were saying if you look back 10-15 years ago, you'd have said "BRICS, that's the future" and just look at what happened to BRICS versus the FANGs. Now we won't tell you what BRICS and FANGs are, Ruchir will. Well FANGs are all the tech companies. FANGs in fact, unpredictably, were the new BRICS. Just have a look at the difference between the two, the stock market gains or returns, FANGs gave 634% returns and BRICS, 37%. BRICS, Brazil, Russia, India, South Africa and FANGs are Facebook, Alphabet, and ...

Ruchir Sharma: Netflix. Amazon for A and G for Google, because now of course it's like Alphabet but in terms of the broad picture here is this. Which is that, and we spoke about this, I remember, the middle of the decade, that the world loves acronyms. FANGs became the new acronym to define the decade. Whereas in the 2000s, it was BRICS. So, technology took over and these emerging markets gave very poor returns over the past decade. So ...

NDTV: And they were the hot topic of 15 years ago, right? BRICS

Ruchir Sharma: Yeah 10-15 years ago, as you know BRICS. And as you know, people were coming up with all sorts of acronyms linked to new emerging markets. Instead, it's the tech which dominated.

NDTV: The FANGs, it's a bit kind of nasty, FANGs. But one kind of worry you do see in that. Let's have a look at this worry. That tech flourished in relative, because they were free of government regulations and that could change. Anyway, let's have a look, how the government regulations have affected different industries. Manufacturing, there are 215,00 government regulations

Ruchir Sharma: In the US ...

NDTV: We'll talk about the United States, yes. In finance companies, 128,000 regulations. In Media and Telecom 99,000, too many regulations, there should be zero. And in tech, 27,000. So, 27,000 compared to 215,000, much more freedom, much more ability for entrepreneurship and development. But you're saying that may change?

Ruchir Sharma: Yes, because you see the political pressure building up. The political pressure is much more about how to regulate these tech firms. Because of issues with data or issues to do with privacy.

NDTV: All the monopolies or dominance, etc. Why can't politicians just leave us alone?

Ruchir Sharma: But I think that the opposite is also going on, which is very important to see. Especially like in America, there's a lot of deregulation, which is also going on over the last few years. In fact, one of the regulations that the business community likes about the Trump administration is that it put into place, that for every new regulation you bring, you have to take out two others. And that's something which I think that even in India, it's worth doing. So, it's these others, it's not just about regulating tech, but it's about de-regulating the other sectors

NDTV: But we have a jugaad system where we'll take put in one big regulation and take out two tiny ones. One is to two ho jayega. Jugaad. The Indian Jugaad System

Ruchir Sharma: A lot of businesses do sort of say that the deregulation is helping the other industries now. Whereas tech is facing increased risk of ...

NDTV: That's true. You do get a lot of pressure to say, you know, they're over the dominating particular markets and all kinds of privacy ...

Ruchir Sharma: People even speak about antitrust laws. So, this is a long, drawn out process, but that pressure is building

NDTV: Quite right. But. You've noticed that big techs are slowing down. That's already happening. If you just have a look at, quite startling how big the slowdown has been. If you look at the last decade, you see growth rates are dropping, in terms of number of users, in terms of market share, etc. Just have a look at this, active users on Facebook are down, the growth rate is down from 48%, now it's at 8%. Snapchat 92%, down to 16% growth rate. These are active users and Twitter's 72% and no growth rate in 2019. That is a worry, big worry.

Ruchir Sharma: Yes.

NDTV: So, of course there is a base issue here. You know, they were much smaller in the beginning

Ruchir Sharma: Base effect yes. That's why even the returns get less impressive because you become big, you want growth and you're already sort of mature. And so, the returns become, so this sort of ties into the earlier point, that after a great decade of growth, returns do slow down.

NDTV: Right. So overall, to summarize in a sentence, the number three Top 10 of the Top 10 trends is this, number three is that the potential fall of big tech, there is a potential that big tech will fall and that is, everybody is saying tech is the future, so that's quite the contra indication.

Ruchir Sharma: Well, tech would still be the future, but the companies that even dominated are likely to change. And we again go back, you know, that list we had earlier seen of the Top 10 companies. Back in 1999 at the peak of the tech bubble, just like now, 7 of the 10 largest companies in the world were tech companies. But, apart from Microsoft, the other six names, you are unlikely to even remember. Including, you know, like the Ciscos of the world, which were on that list. A lot of them have underperformed since. And Nokia was considered the hottest mobile company ...

NDTV: Yes, my God

Ruchir Sharma: ...until then. And it isn't featured on any list today at all. So, the issue is the fact that it's not just about tech. It's about the companies which dominate today face competitive pressures and obsolescence. And so, therefore, these lists change. Right. And we've seen that between the two tech booms that we witnessed this decade, this past decade and the one in the 1990s, how that's changed with Microsoft being the only survivor.

NDTV: So, let's move on to your fourth doctrine. This is about de-globalization, that's been happening and we've all read about it. But here, actual data on how much de-globalization there is and how this could impact the 2020s. The 2010s, the de-globalization was pretty severe after booming, global trade boom for a while, then it had just peaked and it's on its way down. Just look at the figures. From 30% to 60%, from 70%, to 2008, and then it's just come down so that 30-60 could have gone to 70, instead of 70, it's 56. It's coming down. The trend has changed, that's the key there.

Ruchir Sharma: Yes. So, I think that this is the share of global GDP, that for a long time we thought that the global trade was bound to keep on increasing. And it did. You had this hyper globalization in the 80s, 90s.And this is just to do with trade. But when it comes to the other factors of globalization, we've seen a reversal on many fronts. We've seen it on capital flows, even people flow. Migrant flows have slowed down because of all the anti-migrant sort of rhetoric that's picked up. Even in terms of digital flows Now we're seeing ecosystems being developed, which are independent of each other, US and China building. So, it's all part of de-globalization that's happening

NDTV: Trade is global trade. Is it also has to do with something else, Trump is it? The de-globalization? Attacking China?

Ruchir Sharma: That's right. I think Trump has accelerated it, but I think it was happening before that too.

NDTV: It was a trend anyway

Ruchir Sharma: It was a trend anyway. We started speaking about this even before Trump came to power, that the number of countries which are putting up protectionist measures, including India, Russia, all these countries putting up protectionist measures. This started happening pretty much after the global financial crisis of 2008.

NDTV: Right and coupled with this and linked to it is a kind of period of lack of trust. Era of distrust. Just look at the difference in how people trust large brands. The rising distrust of large brands. This is what's happening. The percentage of people who don't trust large corporations and their brands used to be in 2012, 30 percent didn't trust them. And now in 2017, that's gone up to forty five percent. That's almost half. And maybe by 2019 it when the final data comes out, it could be high. Huge distrust. Now, why is that happening?

Ruchir Sharma: Well, I think that it's happened at multiple levels. One of the big reasons why this is going on is because of nationalism. So, I've seen Chinese surveys on this.

NDTV: Right

Ruchir Sharma: And they say that one reason that they will not like to use more US brands is because of the increased hostility with the United States.

NDTV: Right

Ruchir Sharma: So, we are seeing that large multinationals are going to come under this threat, which is that across borders, because of the nationality, you find that there's distrust building.

NDTV: Is distrust building in America as well though? For their own companies?

Ruchir Sharma: Yes.

NDTV: I mean, especially the tech companies.

Ruchir Sharma: Absolutely. It's a really big change, which is that five, ten years ago the tech titans were all celebrated as these good billionaires, as you said, sort of creating this ...

NDTV: Ya, ya.

Ruchir Sharma: Now In fact, if you look at publications such as The Economist, they put tech billionaires among the bad billionaires. So, this is the big switch, which is going on and reflected in this distrust of large brands, especially global brands.

NDTV: Right and your nationalism part has kind of given a boost to local brands and natural products and something indigenous. Just have a look at. In fact, what's happening in India? India, you've seen a rise of local natural products. Now, what does that mean? Just look at it. Percentage market share of local brands in India in 2010 was just 8%, is more than double now to 17%. So, this is again against multinationals and people of cooperation with huge finances. But nevertheless, our local brands have begun to do well. This here you've taken a simple average of toothpaste, shampoo, skincare, etc. But this is a trend.

Ruchir Sharma: Yes. So, in terms of like here much more of local brands now. And I think that it's partly to do with nationalisation and that's how you have some companies even advertising that we are. Saying that you should buy our brands because these are locally manufactured. So, I think that this there's some powerful resonance to saying that the goods have been made here uh locally and uh a much greater belief also in some of the local ingredients, ayurvedic and other things. But I think that this is a really big change which is going on and

NDTV: Yes, and again, global, but it's certainly hitting India as well. Wonderful. I mean, it's actually a positive. I don't know ...

Ruchir Sharma: Yes, across products.

NDTV: Yes, yes, across products. Another area which is slightly different. But localization of data storage, we know countries don't want their data on their economy to be stored in America or somewhere else. They want it in their own country. As much nationalization nationalism as governments also want to keep a way to scrutinize it and have the right handle. So, the data localisation is on the rise. Just have a look at how the data has changed. Protectionist policies that require data to be stored locally is now in vogue. In 2010 45% of data used to be stored locally. Now it's 85% desire to store locally.

Ruchir Sharma: Yes. Isn't that like the number of measures being taken?

NDTV: So, I'll do that again then. These are numbers, yes, okay. So, if we look at data localisation that people want storage of data locally, it's increasing every year. Let's look at Ruchir's data on that. All the research that he's used for this data. Data localisation is on the rise. Protectionist policies that require data to be stored locally are going up the number of policies. If you look in 2010, there were about forty five policies and now eighty five. That's nearly double. So, this whole trend that it's got to be within my country, you can't have it outside part of nationalism, part of surveillance.

Ruchir Sharma: Right. And protectionism. So, it is all coming together. So, you spoke about deglobalization and now we spoke about localization. It's all sort of coming together in terms of ...

NDTV: My worry is that this is more politicians say we want to be national, but actually politicians feeling we need to we need it for surveillance.

Ruchir Sharma: Yes, that's obviously something which politicians will do.

NDTV: Come on, speak out. Be a man

Ruchir Sharma: In terms of what's convenient for them.

NDTV: Okay, so the summary of the number, the fourth of your top 10 trends of the 2020s, number four is that there's deep globalization and that's making way for localization and that we've seen even in India. And it's quite a big change. So, is this so you're talking about localization going into the 2020s as a major new thrust? It's already gone up quite a bit and that's going to carry on.

Ruchir Sharma: Yes, I think so, because as I said, that I don't see these waves which come of globalization. They didn't do last, not just years, but decades. And the rise in nationalist sentiment, this is also something which seemed like an enduring theme. So, if you're going to have deglobalization, you're going to have nationalism, more protectionism. All these, I think, are likely to support local brands much more than global brands.

NDTV: Right. Moving on to number five out of the top 10. And this is a very important point that you highlight a lot, and that is the shrinking working population, people who can go out and actually work. That growth rate is dropping fast and that affects the growth rate of the economy. Just look at this, people of working age. That growth rate is slowing around the world, including in India. In 1950 to 2005, 8, on the average growth rate of the working age population was about 1.8. Now it's down to 1%. You know, that kind of drop in population growth rates is huge, much more than people actually. The figures just appear. It's a huge change.

Ruchir Sharma: And so different from, again, the narrative of the 70s and 80s and which I think many politicians, including in India, are still stuck with that we need a population control policy. But as we'll see that everywhere, we're seeing a huge decline now take place in the population growth rates and ...

NDTV: Working age

Ruchir Sharma: Yes, resulting in a big decline in the working age population growth rates, which are people between the age of 15 to 64.

NDTV: Right

Ruchir Sharma: And I think that this is something which is so underappreciated that there are two drivers of economic growth. The number of people who come to work ...

NDTV: Right.

Ruchir Sharma: ...and their productivity.

NDTV: Yes

Ruchir Sharma: That's just a very simple ...

NDTV: Yes

Ruchir Sharma: ...economic equation.

NDTV: Right

Ruchir Sharma: And it typically, historically both have contributed to economic growth in equal measure.

NDTV: Right

Ruchir Sharma: So, if your population growth rate of the working age population in particular is going to slow down or nearly half ...

NDTV: Is going to affect your growth rate

Ruchir Sharma: ...is going to, it has to affect your economic growth rate.

NDTV: Right

Ruchir Sharma: And I think that that switch people haven't made as yet. We keep speaking about the growth rates, whether India wants 7, 8% or even China wants 6 or US, you know, Trump's support is about 3,4, 5 kind of percent growth rates. Those growth rates with these kind of population trends we have, have become impossible to achieve and we refuse to accept that.

NDTV: We have to shift mind. We have to shift our whole attitude to what is possible, giving this drop, working a number of workers available. And you don't think productivity improvements through tech will compensate for that drop?

Ruchir Sharma: We will see why not in a bit. But so far, there's no evidence that the productivity increases have been somewhat disappointing given the tech boom that we have seen other people talk about data quality not being measured properly. But I think it's got to do with other trends as we will see in the show.

NDTV: Okay. Globally, working age to pool of working age growth rate is dropping. So, having fewer people joining the work force. India. to just have a look at it's not quite the same as global different figures, but India is no exception. Working age population growth is slowing in India dramatically as well. If you look at the growth rate of the working age used to be about 2.5% a year, it's now down to 1.4 globally. It's one from 1.8 to one year, 2.5 to 1.4, which is also a dramatic change in India.

Ruchir Sharma: Yet we forget here in India, too, that in the 1960s, the average family, the fertility rate, the number of kids that they would have would be about five or six. Now we're down to about two. A bit about the average will change. It's a huge change that's taking place. So, you have it both in terms of birth rates going down and people are living longer. But the birth rates have really, really declined in India as well. And if you have a working age population growing at just 1.4%, right. It is extremely difficult for your economy to grow about 5 or 6% to get the balance from. Productivity is very tough. It's very tough. And that's what we've seen with other countries, too.

NDTV: More was actually another startling factor. The two another was that. It's not growing at 1% or 1.5. Many countries with negative growth rate, the working population is going down. We have a look at what Ruchir calls deep population. The population of the working age, people of the working age population is falling in many countries, working population is falling. In many countries dropping. It's a negative growth rate. Let's have a look at the working age group Tourism. In 1985, only two countries did the working age population have a negative growth. In 1942 countries have a negative. It's not slowing down, it's minus, it's contracting.

Ruchir Sharma: Contracting. So, in 1985 those two countries were, I think Afghanistan, Somalia basically. Who cares, right. And now you have an industry. What do you do? Countries include China, Japan, Italy, Germany, negative Russia contracting the working age population. So, I think that this is a huge change that's taking place. It's something we still haven't quite appreciated, opposite of the demographic dividend or the demographic boom or if you remember, the population bomb. That was the big worry of development economics in the 70s and 80s. And he was a bomb. Then the dividend. And now, man, you have to bear population by the population bomb.

NDTV: So, based on that, as you were just saying, with a slowing growth rate in working age population. Is it fair to expect an economy like India to grow 70, 8, 9% like China used to? According to Ruchir, that's, just that has to change. You cannot expect that kind of growth rate anymore because of a smaller growth in working age population. Let's look at what the new benchmark should be. These are new benchmarks for economic success. If you achieve these, you're doing well-meant. Fewer workers will actually mean slower economic growth, as you just mentioned. So, for low income countries, expect something around 5% as a successful growth rate. While there's no longer 8 9%, it's double digits, it's 5. And be happy. Middle income countries 3 to 4% is very good and high-income country, developed countries 1 to 2%. And you're happy because you got negative there. A lot of the countries you mentioned were, whether it's shrinking, were developed countries.

Ruchir Sharma: Yes. So if you go back to a decade ago, the number of countries in the world which were able to grow at above 7%, of which were growing at about 7%, there were about 40 such countries in the world which were registering a growth rate of above 7%, 40, right. In 2019, there were only eight to nine countries in the world which registered a growth rate of more than 7% of the 190 countries for which data is tracked. 8 to 9, 8 to 9 copy to more than 40, which were there in a decade ago. So massive crunch of data, those eight to nine. Most of the small African countries. But even I don't know how much of trusted data, but whatever it is like very small. So, it's become extremely difficult in this environment to grow at a rate of more than 7%. And yet we keep thinking our benchmark for economic success needs to be 8 to 7%, 8 to 9% growth. And we sort of make all sorts of projections of five trillion dollars economy based on these kinds of projections. But that is just unrealistic. Is my feeling about this now if India truly gets back to a growth rate of about 5 percent. The problem with the data quality, we don't know what the true growth rate as yet is advising the US concern.

NDTV: There is genuinely global worries about Indian data quality, but they never used to be. You know, we have a lot of them, but Bengalis isn't a damn good statistics man.

Ruchir Sharma: But the government itself is now acknowledging that they've set up a committee. I think to look at the whole point that

NDTV: What is this global worry about?

Ruchir Sharma: Like in terms of the fact that people do question because it's such a big disconnect between the real time indicators you get and also what the headline GDP numbers are.

NDTV: Right.

Ruchir Sharma: So, most important point here is that if India can genuinely get back to a growth rate of 5% or more, not based on today's data, but the corrected data, I think that will be a fairly good achievement. But we are still some distance away from that.

NDTV: As you put it, that India's economic growth, the rank globally is dropping badly. That's a big worry for us. Just have a look at this. Economic growth in those terms. India's rank around globe around the world is dropping sharply. Here's India's ranked. just have a look, 2010. India was the 14th best of fastest growing country in the world. 2019 India's forty fourth best. And that's if you take the data as authentic and genuine at 5%.

Ruchir Sharma: Yes

NDTV: or 4.9. If it's actually 2% less than that, we'll be 80th or 90th.

Ruchir Sharma: Right. Yes. So, I think that for 2014 to qualify as a shocker, that the growth rates have come off so much and so have our rankings

NDTV: And growth rate has come out without taking into account correct data.

Ruchir Sharma: Right.

NDTV: Even with this worrying data, it's still come down from 14 to 44, That is a shocker. So, let's have a look at the fifth of the 10 top 10 trends globally for the 2020s. This is what it looks like. Number five. Deep population marches on, talking particularly about the working age population. So, expect a world with a slower growth to change your benchmarks, shift your mind. Forget 9 to10% now go back to 5 for poorer countries.

Ruchir Sharma: Yes, that's right. 2% in terms of the average growth rate. But at 2%, less economic growth. The US looks like the best in the class. Which are the developed countries with an unemployment rate which is at 50-year lows?

NDTV: And I must say, U.S. has a huge base due to send means.

Ruchir Sharma: But even the U.S. inefficient until 5 years ago, a 2% growth rate was considered very disappointing. So, this is the new reality, which they seem to have adapted to much more now.

NDTV: Don't you have to say that we have to pivot to a new normal? Isn't that the phrase used in their narrative?

Ruchir Sharma: Yes, that's right.

NDTV: Pivot to a new normal?

Ruchir Sharma: Yes.

NDTV: See it, you know, be a millennial size. So, I think that. Let's move on to number six very quickly before what side tracks us. A new generation rises. This is, you know, Ruchir's generation. And that is causing a marked change in the kind of consumer spending. And this is fascinating how things are going to change because of a new generation, the Gen Z, which is under 21 years now. Two billion of them globally. As far as the millennials are concerned, these are 22 to 37-year olds, almost 2 billion, 1.9 billion, so between them. Huge proportion of the world is now dominated by these younger people. Moving on to Gen X, which is 38 to 53 years, 1.5 million, and then to move on to the baby boomers. You know, the best people of the 60s, 1.1 billion and then which is a standard dumb, the silent generation is 0.3 percent, 3 billion or 0.3 billion, so that is the silent. Which I think is an age, is dumb and you should never use it. Regardless what others do, however ...

Ruchir Sharma: This is not my turn.

NDTV: ... it doesn't really give us the basic point that these data shows.

Ruchir Sharma: Yes. So, I think what this data is basically showing is the fact that we're seeing this big shift in consumer trends, which is happening on the back of this and something which I think would define the coming decade. You'll be seeing that like one thing that I hear so much from is that there's a big demand increase in experiences rather than owning goods. Now that people would rather spend on experiences rather than buying, rather than materialism. I think that this is a big shift that's taking place.

NDTV: Right.

Ruchir Sharma: And we will see some of the trends now on the back of that site.

NDTV: So, one of the things that we hear all the time is that people want to take google. Why buy a car, which used to be the main thing that everybody won't buy a car? But urban now and you can use Air BnB instead of renting a hotel. So, tastes are changing because of also new technologies and new ...

Ruchir Sharma: New technologies and also sort of new consumer habits in the way that the younger people are in the way that they their desires. We'll see this throughout the show that in terms of what they want, I think that is shifting and redefining consumer trends.

NDTV: I'm going to note, just go back to really objecting to not your terms, silent generations over seventy two or something. How many of your top three or four presidential candidates for the Democratic Party are over 70?

Ruchir Sharma: Well, even Trump is.

NDTV: So even Trump is, Biden. Bloomberg, 78. Yes. Not too. They're not silent, man. They may move us and shake. We'll change that to move as a check. Okay. Now, fascinatingly, what Ruchir's find is that because of this new generation, their new favourite pastimes, let's have a look at this. The world has a new favourite pastime, and this is the new generation impact gaming is now the biggest look at the global market size of gaming. Compared to music, which is $17 billion. Films $80 billion and gaming hundred and thirty eight billion dollars. Now everybody knows, you see kids, you get, you know, playing games all the time, but bigger than music and films combined. That is a shocker.

Ruchir Sharma: Right. And I think it's also got to do with the fact that this is not the result of much better technology. All right. Whether it's got to do with phone penetration or the Internet penetration and also the quality or what's coming out campaigning. And this is the big transformation that the music and films, you can argue how much the quality has improved, the consumption of these. The quality has improved in terms of what you see, the technology like static. But in gaming that the improvement has been incredible. Compare the games that we used to play 30 years ago to the games that we're playing today. So, I think that, but this really is something which is so underappreciated. This now is the world's new favourite pastime, that amount of money people are spending on gaming, even though only about one in three people in the world today still are onto gaming.

NDTV: I mean, this silent don't game.

Ruchir Sharma: That's your terms of what they do. It is still the fact that it is dwarfing now.

NDTV: Yes. On the other, it doesn't mean that just came as a real eye opener to me. And if you look at how much people are actually spending, as Ruchir mentions, just look at the data on this. More money is being spent on gaming than any of the other pastimes, more common pastimes. Revenue per user per year for Twitter is about $8 dollars per user. Facebook $19. Google $27 per user. And look at Fortnight, which is a game, $96. That is like mind blowing. And what the one thing I think you also mention is that if people are playing games, how are you going to improve productivity?

Ruchir Sharma: So this came back to the earlier point which we had. You ask me that what's happening to productivity? Is this about other things I think economists are looking at which is the so-called productivity paradox, but why are we not seeing a bigger increase in productivity, given the fact that have technology everywhere around us, which should be productivity enhancing? And this is partly the answer, that if you're spending more of the productivity or slowing down technology on building better games and the consumer habits are shifting, that's unlikely to increase productivity, even though your experience is likely to get better.

NDTV: Yes, I mean, like it's such a big distraction, but that's it's not only technology is what people love, they love it. And look at it's happening in India as well. Huge change in the number of gaming companies. The gaming boom in India. Just have a look. The rising number of game development companies, India in 2000. Then there were 25. Now to 75 companies are making gaming apps.

Ruchir Sharma: Yet this sort of industry is going at, you know, 20% or more every year. So, you want to secular growth industry. Gaming is where you're seeing this.

NDTV: And interestingly, in India, the number of games downloaded is highest in the world number. And there's so many different people are trying all kinds of games. Just have a look at the number of games downloaded. So, part of the gaming boom and India's number of games downloaded, India is highest in the world, as we just mentioned, 58 games are downloaded in India, USA 53, China 30. That came as a low surprise to me and say another country, Turkey 21. So, India three times Turkey, double China.

Ruchir Sharma: This is what happened in a previous calendar year. So just in one year, the number of games that were downloaded. Apps ...

NDTV: Yes.

Ruchir Sharma: ... as you can see, India tops that chart as well.

NDTV: Wow. Real shock. I mean, you do know it. You've seen people using it. But these kinds of figures are just ...

Ruchir Sharma: India, talentless. They weren't truly, has a new favourite pastime.

NDTV: So, what is top trend number six out of the ten top trends for the 2020s? Number six shows that the new generation simply equals new consumption habits. In fact, amongst that, gaming surges ahead of films and music. That is a huge change. Does it worry you?

Ruchir Sharma: Well, I think we all have to, as you said, pivot to this to the new normal in the narrative, to this new trend. And I think that that the opportunity is there, which is that the amount of mind space going on, gaming, the monetization is still not taking place pretty much like the Internet. If you remember like a decade ago. Right. That that's where the attention is moving.

NDTV: Wow, let's move on to number seven doctrine out of the ten top trends for the next decade. And this is about populism. In the past 2010s, the decade just gone by, populism, search the populism of the left or the right. The votes of populist parties rule sharply, both left and right. Just have a look at it. Look at that graph over the years. There was an increase in the 1940s just before the war, and then it's been flat. And then suddenly 2018, the number of populist parties that are getting support left and right, but probably more to the right in terms of support, has gone up very sharply. Yes, it's a big change.

Ruchir Sharma: Right. And this is sort of happened all of the last decade. More importantly, it is what? What's the impact of this? Right. That even if it peaks, it'll take a long time for things to normalize, as you're going to see. So, I think that the impact that this is having on societies on so many economic and political trends. That's what I find even more significantly interesting.

NDTV: And I think the next bit of data shows the different being left and right in this populist populism search. Right. This would which Ruchir defines as increasing polarization in the world. The world is divided like never before. Polarization is deepening now. Just look at the percentage support that any president in America has got from the opposition's base. Meaning if you're a Democrat president, how many Republicans support you? And if you're a Republican president, how many Democrats supported you? Kennedy, who was a Democrat, 49% of Republicans ranked him favourably. If you look at Nixon, 34% of Democrats ranked him favourably, even though he was a Republican. Look at Reagan. 31% of Democrats looked at him favourably. Look at Clinton down to 27. So, it's going 49, 30, going down. Clinton 27% of Republicans looked at Clinton favourably. Look at Obama. People forget Republicans could not stand him 14%. Only 14% of Republicans looked at, ranked him favourably. And look at Trump now. Down to 6% of Democrats rank Trump favourably. That is a terrific trend downwards polarization. If you're Democrat, will not look at a Republican. If I'm a Republican, I will not look at the Democrat. A divided country

Ruchir Sharma: For the US. We have this great data, but I suspect this is exactly the trend worldwide, possibly like in India as well. Right. That that it's become such an ossification of the voter bases that it is so difficult to sort of get any crossover now. Right. And that's why even calling elections has become so difficult. Including in the United States that the favourite question that anybody asks today is who is going to win the election in November in the US? And I think the betting market sort of has it right. It's, say this 50/50. If you look at the betting market, right, there's a margin like you say, if anyone else who always said that anything good at anything could happen.

NDTV: Bengali genes it ...

Ruchir Sharma: But in terms of if you look at it here, which is that in America too, the polarization is such that just the five battleground states in America are going to determine what's going to happen in the election.

NDTV: And the rest are totally polar?

Ruchir Sharma: And the rest have already decided.

NDTV: My God

Ruchir Sharma: If you do a door of America to figure out what's going to happen in the elections

NDTV: Just go to those states.

Ruchir Sharma: Just go to the other end to five and they're relatively small states and ten to twenty thousand people, which way they switch in those four to five states is likely to determine the entire electoral outcome. So good luck to pollsters to find out who those ...

NDTV: Let's have a look at exactly what you're saying. In your next bit of data, you found that increased polarization of the society, a divided society, has actually also meant hardcore support increasing, and therefore less volatility in your support base. Look at, for example, Trump's rating. A lower than historically presidents have had, much lower, but they're stable. Historically, the support pattern for former presidents used to be up and down, all over the place, but for Trump, much lower than that, but more or less flat. People are not, Republicans are not switching to Democrats. Democrats are not switching to Republicans. Easy for pollsters.

Ruchir Sharma: But see what this is so significant that for other presidents, including Obama and ...

NDTV: Presidents is a pun, right ...

Ruchir Sharma: Right. Earlier in terms of the fact that it's a, that this swing in terms of the low approval rating and a high approval rating during their term would be about 30%. When they were doing well, 60% approval ratings, when they are doing poorly, about 30% or so. That's roughly what the ...

NDTV: Huge change. As people swung back and forth.

Ruchir Sharma: Yes. Swung back and forth. Less and less so. But it still swung back and forth. In Trump's case, his approval rating has literally moved in a range of plus minus two, three points of 40%.

NDTV: Can you imagine

Ruchir Sharma: Yes. So, no matter what's happening, you get impeachment trials or you get the entire farce which takes place or what's happening on the border. Anything can happen, and the approval rating moves by just 2 or 3%. It's as good a dead man's heartbeat, this graph

NDTV: Amazing, actually. And based on that, the summary of point number seven, the trend number 7 out of the 10 trends is as follows. Here it is, trend number 7. The world is divided like never before, but this polarization, likely to have peaked.

Ruchir Sharma: That data tells you that, which is that how much worse can polarization get here. Only 6% of Democrats are going to back a Republican president, and all 91% of Republicans are going to just back whoever's their president.

NDTV: Right.

Ruchir Sharma: How much can this rubber band stretch more? The spread is already down to just six points. And so, I just feel that we could be at a stage where we see some move again towards rationality and centrism. But maybe that's an optimistic take. There's no sign of it so far. But it just seems that ...

NDTV: Right. But they may actually develop some common ground, as people say, look, what are we fighting about in such extreme measures?

Ruchir Sharma: And so little gets achieved then. When you sort of have that because you know that both sides are going to attack each other, or if they come to power, they're going to reverse each other's policies.

NDTV: I just want to add, do you think a lot of this polarization is based on the most emotive emotion of hatred?

Ruchir Sharma: It could be that in terms of it. But, you know, it's been progressing for the last 50 years. So, I would like to believe there's one factor behind it. But I think this is something which we still haven't understood and of course, people ...

NDTV: But you know, you see a big drop in Obama and the increasing drop in Trump and Trump is, a lot of it is based on hatred of immigrants, of different, not true Americans, etc. And you see that in India as well.

Ruchir Sharma: Yes.

NDTV: So, this polarisation, hatred helps polarization?

Ruchir Sharma: Yes. Yes, I think so. It's much more tribal loyalties possibly built first by television, then by social media.

NDTV: By television? Okay.

Ruchir Sharma: So these are just factors that we can try and guess as to what's leading.

NDTV: It's not television. That's all gaming. Gaming by politicians of a different game. Okay. Let's move on to our more financial things now, interest rates and inflation, etc. Let's have a look at what kind of interest rates one can expect based on the past. In 2010's, the last decade, we've seen the lowest interest rates in 800 years. These are real interest rates adjusted for inflation, which is the right thing to do. But that's amazing. So, if you look at real interest rates, just look at that, they're really at the negative right now. Sharma, there was one little, yes, short term interest rate, the one little equivalent in 1965. But at the moment, nothing like in the 800 years.

Ruchir Sharma: Yes, some money to those who can sort of access it, is extremely cheap and widely available. And that's also one reason why financial assets around the world have done so well, especially stocks, including in places like India, which is that even if the fundamentals haven't looked that great, people with such low interest rates feel compelled to sort of invest in assets such as stocks because they don't get much in the ...

NDTV: In the bank, the bonds, or whatever.

Ruchir Sharma: ... in the bank. Right. In terms of because if you adjust for inflation, you know, the return of the bank accounts basically is close to zero. So, or negative in many countries. So that's what's sort of leading to financial assets doing so well. And also, I think to the fact that we have this period where money is so easily available to those who can access it.

NDTV: Right. And that translates into inflation. And if you have a look at inflation globally, at least look at it, inflation in India and how it has changed over 10 years, low inflation India globally, it has been, and in India. But how it has changed is important. India's inflation is still high compared to global levels. Just have a look at this. Ten years ago, India was one 161 out of 190 countries in terms of inflation. Really bad inflation. And now it's still at 145. I mean there are 144 countries, 144 countries ahead of us with lower inflation than India. So that is a very, not even halfway mark.

Ruchir Sharma: Yes. But I think that this tells you two points. One, that inflation across the world has collapsed because India's inflation rate, when its ranking was 160 was 9 to 10%. Now India's inflation rate is closer to 5%. The headline inflation rate. And yet our ranking hasn't improved that much. Because globally, inflation has completely collapsed. So, this is what this tells you now.

NDTV: But it also tells you that even though you've gone down to 5%, don't be all thrilled about it, because globally it's even better.

Ruchir Sharma: Yes. That's right. Yes.

NDTV: Okay. Let's move on to what's going to happen in the 2020s. This is what Ruchir, based on analysis of the part, inflation may come back. Now to what extent? We'll discuss in a minute. But here are the signs. Number one, global unemployment rate at very low right now, leading, pushing for higher wages. Next, if you look at productivity growth, as you mentioned, people are gaming, what do you expect anyway? Productivity is low growth for various reasons. And the global government debt was something you've been stressing a lot over the last decade, in fact, is at its all-time high of 90% of GDP. That's just government. Not all total debt in the country. 90% of GDP, that's unprecedented.

Ruchir Sharma: Yes. The only time when governments, including the United States, have had such high debt levels or run such large budget deficits in normal peace times is, or rather that never in peacetime it's basically been when they've had a war or something. But this is possibly the most controversial forecast, I would say, of all the 10 that we are going to discuss today. Because there is no evidence of inflation in the world today.

NDTV: Yes. That's when you make forecasts. Not after it's over.

Ruchir Sharma: Yes. So, there's no evidence of it.

NDTV: Good for you.

Ruchir Sharma: And a lot of people will be sort of seeing that. So many economists have been calling for high inflation on the back of a low interest rate, and it just hasn't transpired. So why should it happen now? Is going to be the sceptical calling for that. And my feeling is the fact that that because now you have such a resources constraint which is building up, that you could finally begin to see some inflation break out. And when that does happen, it'll be a huge event because people are so used to inflation rates only falling. So, this is a very important and yet possibly the most controversial of the day for us

NDTV: Well for us it's not controversial. Anybody says, why do you think inflation's going up, is not going up? We'll just say, Ruchir says so, simple as that. So, in a nutshell, what is this? Eight out of the 10 points. Number 8 of the top trends of the 2020s. Inflation may stage a comeback. And that affects behaviour a lot, and what you should think of doing, invasion investing, etc.

Ruchir Sharma: Yes. Because gold, for example, could be the big winner in that environment ...

NDTV: ... sort of scenario. Interesting. Gold could be important. Okay, let's move on to the second last one. Number 9 of the top 10 trends of the 2020s. Number 9, where we're going to talk about the falling fourth estate. Fourth estate, of course, is newspapers and television. And people are getting news less than and less from newspapers and television, except on this show, this everybody gets, but other channels they don't get. Okay. Got it. Why don't you write that clearly? So, the percentage you get news from. One of is ...

Ruchir Sharma: TV, and one is print.

NDTV: So, the top one is, I think, TV. The percentage who get news from television has dropped from around 80% to around 50% of the people, and print from around 50% to just 15% now in the last 20 years. That's a huge decline. A huge change.

Ruchir Sharma: Yes. So, this is, you know, like, I think this trend is well understood that we're seeing the decline of the traditional media, but that it just continues unrelenting. It's accelerating. I think that is something which, you know, we will keep on, have to adjust our business models to. So, this is what's really going on. And again, the important implication of this is that it's giving way to what Mark Zuckerberg, of all people, calls obviously the rise of the fifth estate. Which is that you've seen such a big ...

NDTV: Online.

Ruchir Sharma: ... yes, online, social media. And he calls it the fifth estate because there's such decentralization now of news dissemination that it no longer now is about who controls it. Anybody with a Twitter account becomes an opinion person. Anybody on Facebook and Instagram is able to sort of communicate and visualize what they feel.

NDTV: A huge democratization of spreading of news, like if you're good. And we have so many, even in India, there are individuals are doing so well, Dhruv Rathee for example.

Ruchir Sharma: That's right.

NDTV: Amazing. Now, so the rise of the fifth estate, just have a look at that. Fifth estate meaning online news. You're getting your news from online sources. This is what it looks like. In USA, percentage who get their news online used to be 12%, it's now 52% getting their news online predominantly.

Ruchir Sharma: Yes. And the same trend is happening across the world as we see in emerging markets too such as India that we are seeing a much greater increase now in peoples who are ...

NDTV: Let's have a look at India. This is the data that Ruchir has researched and found about India. What percentage are now getting news online versus newspapers and television? Young India in particular gets their news online. Percentage of Indians under 35 years of age who get their news online rather than television and radio 56%. And look at it for print, 16%. People are now, youngsters are now reading newspapers and television 26%. Now, I want to make a very strong statement here. NDTV is a Fifth Estate organisation. We are moving completely digital. We have been doing for the last year or two years and dot com, you're right, is growing rapidly with 200 million unique users. Sorry, a little bit of advertising, but I'm just saying we are just part of the Indian trend.

Ruchir Sharma: Yes, that's right. And I think that this is something which is going to accelerate with the generational change as we spoke about it. That really is the common theme of the top trends, which is that the generational trends as to how they're shifting and shaping consumer habits.

NDTV: And Twitter, in particular, you've focused on for a while. And look at how Twitter, Twitter users, how many of them actually use Twitter to get news is amazing and how it's rising. It's a rising source of news, Twitter. The percentage of users, Twitter users who get their news from Twitter 52% in 2013, just six or seven years ago. 59% in 2016. And in 2017, 74% saw it. And in 2018, 71%. That is amazing that Twitter is predominantly now being used for news.

Ruchir Sharma: Yes. That is the people getting the news primarily from Twitter in fact. So, I think that this is something ...

NDTV: I mean, they go to Twitter for news, not really for chatting with others or finding gossip news, right?

Ruchir Sharma: Yes. No, I think that you would see that even amongst all fellow journalists and stuff that that's become the main source of news.

NDTV: And fellow presidents like President Trump, he's transformed Twitter for news or non-news or alternative facts.

Ruchir Sharma: Alt news.

NDTV: Alt News. Yes. So now let's have a look at the ninth in the top ten trends of the 2020s. The fifth estate that's online rules in the 2020s. That is a big change. And amongst that, gaming again. You know, it's part of that same kind of phenomenon. More democratization, more worrying. There are worrying aspects to it, of course, of curation. Would you say curation is becoming, coming back off it?

Ruchir Sharma: Yes, I think that ...

NDTV: Curation, meaning people, explain what you mean by curation.

Ruchir Sharma: Right. So, what we've seen over the past decade is proliferation. So much of data, so much of news know which is hitting you. I think that we see a trend now of much more of curation where people are, and this is being facilitated by artificial intelligence, AI and stuff that people now sort of want to be told what exactly to read, how to curate stuff. I think that the trend is taking place and we're seeing a lot of tech development take place towards that because it is so much data around the world. In fact, the bulk of that has happened the last couple of years. So, I think that this is the new trend now on curation.

NDTV: Right. Let's move on the tenth and final and then to a quick overview of all ten. But the tenth and final is a fascinating one. The amount of inequality in the world and in India kept rising in 2010 and this last past decade. Just look at some of the figures, the number of billionaires as an indicator. This global went up from 2,011 in 2010 to 2,153. More than double the number of dollar millionaires we're talking about. Yes. And if we just quickly look at India, it's, of course, then smaller because it's only one country across the globe. But the increased percentage is about the same, more or less doubled in India, the number of age of billion. It's the age of billionaires in India too. The number of billionaires in India have gone up from 49 in 2010, up to 106, so also doubled. This kind of trend indicates greater inequality. Few people are making ...

Ruchir Sharma: This is one way of looking at it. There's so much controversy regarding the inequality data. How do you measure it real like? Have you included income transfers? And I included that symbol then? Yes. So, in terms of what you this is just telling you. Yes, I think that it's also more than whether inequality is rising in order, by how much is right. It's also the perception. Yes. I think this entire perception is there. About the top 0.1% of the world is sort of dominating. Right. And they're taking a disproportionate share of the wealth. And this is what this data is.

NDTV: Right. And you say because of this, I mean, everybody's focused on these few billionaires around the world. And there's a bit of a backlash. So, let's look at the backlash that Ruchir is talking about. It's building. Around the world there's increasing demands for more equality in our society, financial and wealth, equality and indications one. You see politicians around the world are bashing millionaires and by name.

Ruchir Sharma: And we've seen this in the US too. It's a very funny situation that you have a billionaire entering the Democrat field but not gaining much traction. And you also obviously have Trump who is a billionaire, but on the other hand, this the left, the left wing of the Democrat Party is actually naming billionaires now in terms of. And that would not happen before. So, this is, I think, very kind of, yes ...

NDTV: That is the leader that the, you know, identifying and wanting something done. And apart from that, there's pressure on them for increasing expenditure on new health, on increasing taxes, free college, going to college, no more fees and free healthcare. A lot of pressure on those as well.

Ruchir Sharma: Yes. I think that we're seeing a shift now much more towards redistribution, of course, in America. They call it a shift away from Wall Street to Main Street. But I think that we are seeing this sort of thing now so people can call this populism. Some can call these whatever policies you want. But the pressure is clearly building that something needs to be done to redistribute some of the wealth, rather than just to create it.

NDTV: I just read that line again. There's a misprint this in. No, sorry. We'll go back. No, no, no. It's wealth, not health. The increasing calls for new wealth tax, yes. For free college and for healthcare. And then you can take Groucho's after that. And then the third point that you mentioned, Ruchir, is that millennials are focused on promoting socially and environmentally sustainable investing. Millennials and generations, they're very worried about the environment and all this backlash. They want much more billionaires and corporates to dig much more, pay much more attention to social projects. Right?

Ruchir Sharma: And something that we see in the financial industry as well, which is that these funds are being launched now, which are targeted towards this. So, the strongest growth we are seeing now are in funds which are like in India. They call it, you know, CSR or right in the corporate social responsibility. And in the US, it's called Tuckwell ESG sort of Fino or social impacting fund. So, I think we're seeing this trend. We want investment in areas which have social good?

NDTV: Yes, social good or they want the companies that you're investing in, right, to be screened for those. But how good are they on those on those scores? And if they're not good, how much you're engaging with them to try and bring about change? You know, when I was travelling a lot around California and the Silicon Valley, one of the things and I felt very proud everybody was talking about. Indians are now making great CEOs. Why? Because they have both a head and a heart, and the new trend globally is that you must not just be whatever it takes, I'm going to win. You must also have a social message, a heart. You must look at all the aspects, other aspects of developing an organization. And Indians have a head and a heart just like you.

Ruchir Sharma: Yes, that's great to hear that.

NDTV: Yes. And Satya Nadella and Pichai. They've proved they've got a heart They are very sensitive and they've done so well as a result. And that's even at smaller levels. Indians are becoming CEOs.

Ruchir Sharma: Right.

NDTV: I want to ask you which job, which CEO you're going to be, of some social organization?

Ruchir Sharma: Yes, definitely.

NDTV: Okay. In terms of the next aspect of this pressure, or the backlash against inequality and pure capitalism. You call it moral capitalism. The 2020s Ruchir says, you're going to see a rise, or the pressure on more moral capitalism, in capitalism with morals. The percentage actually, if you look at people who want corporates to work for social change. And this is what it looks like. Global average, 73% percent are saying we want not just pure profits, think about society. And in US it's about 74%. In India, it's 81%. Of course, we're a poor country. Poverty is very visible. So, you want people to effect that poverty and change. And I think one of the few countries that's higher than India is Mexico, that 87% want investment in social change.

Ruchir Sharma: And this is not just to do with absolute numbers. It's the trend, that every year we see that this number is going up. So, you know, by about 8 to 10%. So, the same snapshot from five years ago would have shown the numbers to be closer to 50, 60%. Now it's going to 73%. It's almost becoming the norm now, that you have to do both. It's not one or the other.

NDTV: I'm going to say something which is absolutely based on no data. When we were young, the boomers, we had a lot of social objectives, demonstrations. Then it seemed to die away with your generation. And now the Gen Z and the Millennials are bringing it back a little bit. Maybe not so much the millennials, but the Gen Z, the really younger lot seem to be more involved in society and saying not just pure capitalism. Based on hard data by the way ...

Ruchir Sharma: No, but it's backed up by this data too, that consistent trend that we are seeing here is this.

NDTV: Because more and more youngsters are coming in also ...

Ruchir Sharma: That's right. So, you know like why is this happening, the push is coming from them?

NDTV: We had a gap generation. Instead of calling you guys the Gen whatever it was.

Ruchir Sharma: Gen X.

NDTV: Gen X. You're the gap generation. Not the, there's a silent, the gap. Two socially conscious generations on either side. Shocking. So, let's, if you could now just summarize quickly. All ten.

Ruchir Sharma: Yes. So, I think ....

NDTV: Sorry, sorry, sorry. We just need to, in summary what you're saying is going to happen in the next 10 years is you're going to see more, the rise of moral capitalism. That's what you're saying. Moral capitalism. By that you mean capitalism with a social conscience.

Ruchir Sharma: Yes, yes.

NDTV: And you're seeing that happening and that's going to get serious

Ruchir Sharma: I feel like I've already been serious and now I think it's going to mushroom as things develop this decade.

NDTV: Right. A good area to think, if you're going to invest, it's both good for society and good for returns. I mean, it's that double whammy you get.

Ruchir Sharma: Yes, yes, yes. Double benefit

NDTV: Actually, a lot of, even in the Valley. Any new projects, start-ups, they like to see an idea that has both a social impact and a profit in it. It used to be just profits.

Ruchir Sharma: Usually just profit and it's particularly strong in Europe. It's the strongest from there. When I travel the world, I think in Europe, you see the maximum demand that even of pension funds and other institutions, they are actually asking their investors, how much are you doing on this front?

NDTV: Right. Got it. Okay. Let's very quickly go through all 10 and then. I won't say what we'll do after this. We'll have a nimbu paani, okay. The top 10 trends of the 2020s. Here's Ruchir's number 1. Ruchir, America will peak. The rest of the world will rise. The American economy has done brilliantly. 2010 to 2020, 2019.And now it's going to peak.

Ruchir Sharma: Right. This is, again, a forecast. It's hard to know if it's going to happen in 2021 or 2022. I think that if history is any guide, right, once a country does so well in an economic perspective, and even more so from a financial perspective, the subsequent decade tends to be disappointing at least. So, it's not as if that's the end of America. But maybe even a pause to refresh. And the other economies which have gone through such a tough period over the last decade, cleaning up the mess partly because of the boom of the 2000s, those will stand a better chance of re-emerging,

NDTV: Re-emerging, point number 2, let's have a look. The second. Sorry, what happened, okay, point number two, the second trend of the Top 10 Trends of the 2020s is that smaller companies may be beautiful again. Explain why and what to expect in that.

Ruchir Sharma: Yes. As we saw from the data here, which is that churn is the norm. So, we're likely to see new winners emerge in the Top 10. But more importantly, I think the fundamental conditions are coming in place where some of the smaller companies may do better, partly because of the other trends that we discussed, whether it was localization, de-globalization, rise of nationalism. The environment is shifting in general towards smaller companies doing better after they have done so poorly.

NDTV: Yes, because they always used to do as well, but they have had a bad patch. So, you think they could go back to the norm?

Ruchir Sharma: Yes

NDTV: They'll pivot to the ...

Ruchir Sharma: Pivot to the trend line.

NDTV: Correct. Okay. Point number 3, if you look at the third trend out of the Top 10 Trends, big days of big tech are over. Sorry. The best days of big tech companies are over. By that you mean the big tech companies have done so well in this decade and you've seen companies, Top 10, don't replicate in the next decade. So, these Top 10 could be they're vulnerable?

Ruchir Sharma: Yes, vulnerable in terms of the fact that they'll be around, but their returns will be disappointing. And that's what we saw after the 99-2000 tech boom as well, that the 7 of the 10 largest companies in the world then were tech companies, like the case today.

NDTV: Right.

Ruchir Sharma: But of the 7 of those 10, only one was able to survive in the Top 10 for a long period of time. And every other company faded. And not just faded, faded quite sharply after that.

NDTV: Amazing, actually. Okay, number 4, point number 4, trend number 4 out of the Top 10 trends of the 2020s. Here it is. De-globalization will make way for localization. And you've already seen slight indications that that trend is going to continue?

Ruchir Sharma: Yes, I think it's just started. So, we're seeing that the market share, the market share gains are a lot. Now, once again, these are forecast based on what we're seeing at a fundamental level. And it links into the other trends that you have, de-globalization, you have more nationalism, you are likely to see much greater protectionism as well, which helps local companies rather than global brands.

NDTV: Right. They're all linked in that sense.

Ruchir Sharma: Yes.

NDTV: Okay, now trend number 5 out of the Top 10 Trends is as follows. It says that slower growth rate; new norm is going to be slower growth rate targets because of a decline, or a decline in the growth rate of the working population, either a negative or a slower growth of the working population. The working population going to not grow as fast and productivity is not going to compensate. So, don't expect the 8, 9% if you're 5, genuine 5, not fiddled 5, genuine 5 for a poor country, you should be happy.

Ruchir Sharma: Yes. For emerging markets, the new definition of economic success, I say 5% economic growth. For a middle-income country, if you get to about 3 to 4. That's what I say in China when I go there: That listen, 6% is not going to be achievable anymore. You get more than 3 to 4% economic growth, that's very good. And the United States and even more in Europe, you do 1 to 2% even. That's great. And there's one point I'll make here, that per capita income becomes a more important measure of success now, rather than just GDP growth rate. And this is very true in Japan. Here's a fascinating statistic that I'll leave you with at this point; that in per capita income terms, which is in terms of not just GDP growth, but in per capita terms, US, Japan and Europe have grown at roughly the same pace over the last 20 years. So, it's basically the American Advantage.

NDTV: And people feel per capita.

Ruchir Sharma: That's right. And the American Advantage has a lot to do with superior demographics. And in Japan, despite virtually no headline economic growth, why there's been no social unrest? Why there's not been greater angst? Partly because in per capita terms, it's still doing okay.

NDTV: It's also one of the greatest countries in the world, Japan. Anyway, let's look at point number 6. Trend number 6 in the Top 10 trends of the 2020s. New generation that's coming up will determine new consumption patterns and one of the things which is mind blowing is gaming, as opposed to films ...

Ruchir Sharma: And that's the world's new favourite pastime as we say

NDTV: Amazing, but much more than that ...

Ruchir Sharma: Yes, but that's a common theme that as you can see in our Top 10 trends, which is that the rise of the new generation, the millennials, the Gen Z, I think that they are redefining many consumption patterns. They want more experiences rather than owning goods and other items. And also in terms of how they're spending their time. I think that they're reshaping these patterns and as we see how they're consuming news. So, this is another big common trend, whether it's de-globalization rise of the millennials, de-population. These are themes which I think pervade all adopting trends.

NDTV: So, they're looking at NDTV.com rather than just NDTV.

Ruchir Sharma: Much more

NDTV: Much more. Right. And we're Millennial, Gen Z

Ruchir Sharma: driven company ...

NDTV: ... driven company. I wish. Okay, point number 7. The world has never been more divided, polarized. But polarization cannot get worse. It's so bad right now. So, you see some improvement?

Ruchir Sharma: I'm hoping so because how much can you stretch a rubber band? It's already at an extreme. When you have a very, have a situation where 90% of the Republicans will support Trump regardless of what he does and 6% of only Democrats will support him, no matter how the economy is doing, it just tells you, you know that, how much worse can it get from here. So, I'm hoping at least that there is mean reversion here. But so far, it's polarization at its extreme.

NDTV: Now point number 8. Inflation may stage a come-back, inflation may come back. It's been a good decade for low inflation, but now it may stage a come-back.

Ruchir Sharma: Yes, because inflation's been trending down really since the early 80s across the world.

NDTV: Right. But you've seen a lot of signs that ...

Ruchir Sharma: There's some signs that this may eventually come back, just when everyone has given up on it. And often trends shift when everyone has given up on it. This is the forecast which is likely to be met with more scepticism, and the most controversial one, but a safe bet I would say is to have some gold in your savings, right? In terms of how? In your portfolio. Because if gold, if inflation does stage a come-back, then gold tends to do quite well in that kind of an environment.

NDTV: Number 9, the Fifth Estate, that is tech is going to rule the 2020s. But it may not be the same big companies. But it's again the link to the younger generation, Gen Z, the millennials etc.

Ruchir Sharma: Yes. A shift of balance of power. That it's become much more decentralized now and the traditional media is also being forced to adapt itself. But some are doing so quite successfully as well. I don't want to undermine that. I think that if you look at some of the leading publications in the world such as the New York Times, The Washington Post, they've been able to pivot, as we put it, in terms of this sort of new environment. But that's really how things are shifting and you have to adapt to that. But there's one other thing which is coming through here, is also I think that, a somewhat countervailing trend here is about curation. That as you get so much of this ...

NDTV: By curation explain exactly what you mean

Ruchir Sharma: You want somebody to filter, not give you all or not by some machines, even as AI, but something which is able to curate for us to select, based on your own habits, right, as to what you are going to lie or what you are going to dislike, rather than sort through the mess yourself

NDTV: Okay, the final of your Top 10. I think it's fascinating, is the rise of moral capitalism. Capitalism with a heart, capitalism with a social conscience. And that's again pressure on politicians to change and billionaires to change.

Ruchir Sharma: Right. And the pressure once again building, both because of the perception about income inequality and wealth inequality, and also because millennials, the younger generation, that's what they care for more, that's what they want companies, they want to focus much more on other goals, rather than just profit. Now of course, it's, you want profit at the end of the day, but you want these other objectives also to be met. So, the pressure is building bottom-up.

NDTV: I will just put it that, it's the return of the wonderful people of the 60s. You had 50 years of gap and the youngsters are back to the youngsters of the 60s. Thank you very much Ruchir. That's absolutely fascinating. For once you've worked hard in your life. Thank you very much.

Ruchir Sharma: Every year. Yes.