Vasuki Perspectives · Notes on Money & Motive
Butter Chicken Doesn’t Help Lose Weight
The other evening, I had dinner near Mumbai airport before catching my flight home. Whenever I am in Mumbai, I make sure I see him for dinner — and he has a remarkable habit of asking questions that stay with me long after the meal is over. This essay is the result of one of those questions.
As a good Punjabi, I was enthusiastically demolishing butter chicken with naan. As a good Gujarati observing Ekadashi, he was perfectly content with fruit and a cold coffee. I happen to be on a determined mission to lose weight. He, rather annoyingly, has already succeeded.
That evening, two things wanted to happen. I wanted to lose weight. India wanted more foreign investment. Neither, I suspected, was going to happen without changing course in a dramatic way.
As I reached for another piece of naan, our conversation drifted to the Federal Reserve, the rupee and the surprisingly modest flow of foreign portfolio investment into India. Somewhere between the butter chicken and his fruit plate, it struck me that my dinner and India’s investment policy suffered from exactly the same problem. Both had admirable intentions. Neither had aligned its actions with those intentions.
Businesses create wealth. Policy determines how much of that wealth survives the journey back to its owners.
Where did the ₹20 go?
| Illustrative economic journey, ₹100 invested | Value |
|---|---|
| Initial investment | ₹100 |
| Value after one year | ₹120 |
| Less: corporate tax | −₹5 |
| Less: dividend tax | −₹6 |
| Less: INR vs USD (illus.) | −₹5 |
| Less: USD vs gold (illus.) | −₹8 |
| Real value retained | ₹96 |
Not an accounting statement — an illustration of how successive policy leakages erode the real value a foreign investor ultimately retains.
Same ₹100, different choices
| Route | After 1 yr |
|---|---|
| Indian company | ₹96 |
| GoI security (6%) | ₹106 |
| USD FCNR deposit (6%) | US$106 |
The state seeks foreign capital for enterprise while offering sovereign alternatives that compete for the same capital — financing itself with the very flows it says it wants private business to receive.
“Capital has no passport, no ideology and no sentiment. It simply follows incentives.”
The irony is that the Indian state both seeks foreign capital for enterprise and offers attractive sovereign alternatives that compete for the same capital. In effect, it is consuming the very foreign capital it says it wants private enterprise to receive, while incentivising investors to finance the sovereign instead.
As I drove alone to the airport after dinner, I found myself smiling. Judging by the amount of butter chicken and naan I had just consumed, my prospects of losing weight had not improved in the slightest.
Wanting to lose weight is not a diet. Wanting foreign investment is not an investment policy. Intentions define the destination. Actions determine whether we ever arrive.
Life has a peculiar way of rewarding what we do, not what we wish for. Neither markets nor waistlines negotiate with good intentions. They respond to incentives, discipline and consistent action. Unfortunately, butter chicken and naan have never been part of a successful weight-loss strategy. Perhaps investment policy isn’t very different.
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