Warren Buffett Feasts On India

BERKSHIRE HATHAWAY is known for being a conservative but canny investor.

- Minhaz Merchant

The firm’s 88-year-old chairman Warren Buffett, known as the Oracle of Omaha and one of the world’s wealthiest men, has stayed away from high-priced Internet stocks, especially loss-making startups in emerging markets like India.

Buffett’s decision to invest in Paytm therefore conveys three key messages. First, it is an endorsement of India’s startup ecosystem. Berkshire has invested around 3.5 per cent in One97, Paytm’s parent firm, valuing the company at just under $12 billion (Rs 86,000 crore). While Berkshire’s investment of around $400 million (Rs 2,900 crore) in Paytm is tiny compared to the size of its global portfolio, it is nonetheless significant since it marks Buffett’s first investment in an Indian firm. Buffett clearly sees the Indian digital pay industry as a major growth story.

The second inference to be drawn from Buffett’s investment in Paytm is renewed faith in the broader Indian economy among international investors. India has gone through a difficult two years. The economy was disrupted by demonetisation in November 2016 and by the uneven implementation of the Goods and Services Tax (GST) in July 2017. Annual GDP growth fell to below six per cent before recovering to over seven per cent. Growth in the first quarter of 201819 was 8.2 per cent. With no major self-inflicted economic road blocks along the way, India’s economy can now expect to hit eight per cent annual growth fairly consistently.