India’s BQ: From ‘Shunyata’ To Tomorrow

This is a series of articles by leaders on how India can raise its Business Quotient.

India's past embeds heuristics which can help us manage our future. Her ancient texts gave us the concept of Shunyata, i.e., the source of life is nothingness. It also provides us with the view that the spirit is the whole and from the whole, if the whole is removed, the whole still remains.

ॐ पूर्णमदः पूर्णमिदं पूर्णात्पुर्णमुदच्यते

पूर्णस्य पूर्णमादाय पूर्णमेवावशिष्यते ॥

These apparently opposite explanations of the source of life or the universe were converted into a mathematical equation by the great mathematician of the 7th century Brahmagupta – an equation that gives us the central idea of the India of the future.

Brahmagupta was the first mathematician to recognize the significance of zero. Brahmagupta saw that zero could be split into two equal but opposite components like the ancients had experienced and postulated. Brahmagupta argued that zero was the number which resulted from adding any number to its negative partner like “one” plus “minus one”. This rule laid out by Brahmagupta for calculating with zero surprisingly forms the foundation of several mathematics and physics principles. Brahmagupta's conceptual trick of splitting nothing into two equal but opposite components arguably underpins the big bang theory, i.e., the universe was created from nothing, in the big bang, and may one day returns to nothing, in a big crunch or helps explain anti-matter as the opposite of matter. How is this concept of zero relevant to guide us in making choices in the coming years?

It brings us to the concept of barbells in life or in managing the Indian economy. This heuristic and, in fact, mathematical insight leads us to believe that a one sided view on economic matters is a faulty approach.

Let us examine this in the context of managing India's future. It is widely recognized that India has among the best demographics in an aging world. However, this positive is offset by a population that is sub-standard in terms of health and education. But India also has a rich culture to guide its people – and arguably the average Indian is hard-working and highly aspirant. Now, India is also genetically coded for risk taking – India has been renowned for its trading instincts even though these appear to have faded in recent decades. This genetic coding has not gone away.

Albeit at the same time, India needs to fund the education and skilling of a vast army of daily wage earners or the salaried class. This is the barbell or shunya approach from ancient India. Other such examples include:

• Vibrant capitalism and private enterprise versus state owned activities in non-profitable areas.
• Centralised policy making and decentralised or state-level implementation.
• Centralised tax collection (GST), decentralised spending (states or municipalities).
• Price controls for government-sponsored essential services and a market-led economy for all others.

Even from a stock market investors' perspective, the concept of barbell is crucial.

Investing on the basis of a forecast of the future is fraught with risk – the future is neigh impossible to predict.

Instead, investors are better off by preparing their portfolios for scenarios. Recalling Brahmagupta's concept of zero, the investment portfolio at one end should contain steady low but highly predictable returning assets in large quantities; and at the other end should contain low exposures to high-return and high-risk opportunities which may also yield nothing in a path dependent future, but could generate a massive fortune too if things go right.

This barbell methodology may be controversial and may even appear risk averse but in the long run, generates better outcomes. This approach is also less prescriptive but could be a superior way to overcome uncertainty.

The concept of Shunyata is just one example of India's culture and its relevance to the modern world. Lindy effect is in play with many of ancient Indian practices. Lindy effect is a concept that the future life expectancy of non-perishable things like an idea is proportional to their current age so that every additional period of survival implies a longer remaining life expectancy. Ancient India already had the ideas and their survival for several millennia suggests that they will continue to survive for a few more millennia. We just need to put a modern context to these ideas to power the country ahead.

Ridham Desai is managing director at Morgan Stanley India and also serves as head of equity research and India equity strategist.

The views expressed here are those of the author's and do not necessarily represent the views of BloombergQuint or its editorial team.