Is Manmohan Singh a blessing or a curse?

Jan 9, 2012

In this issue:
» Pvt participation in railways: a solution for infra de-bottlenecking?
» NPAs are good for this business?
» Financial troubles make airlines unsafe for travel?
» Simple solution for oil cos
» ...and more!

The year 2011 is being touted as one of the worst for the Indian government. U-turn on major policies just because they threatened loss of votes. Policy paralysis. Spate of scandals. Stark evidences of corruption. Such issues have darkened the public image of the government. Even the business community hurled verbal stones blaming the government and most importantly the Prime Minister (PM) for the dismal state of affairs in the country.

The PM, Dr Manmohan Singh, has naturally come under the hammer as he is the face of the government. He has been held responsible for the government's inaction. But despite such a widespread negative opinion, there is one respected gentleman who thinks that we Indians are blessed to have Dr Singh. This gentleman is none other than Mr Deepak Parekh, of HDFC Ltd who in 2011, was vociferous on issues like the inefficiencies of the Indian government. He is the same man who had co-authored the Open letter to the PM citing the need for better governance to improve the business sentiment in the country. Now in a recent media interview, Mr Parekh has stated that Dr Singh is the best Prime Minister that we have had. The reason for this is that Dr Singh is one of the cleanest politicians with hardly any scandal or misappropriation to his name. Without argument, Mr Parekh's reason is true. However, we think his conclusion is wrong.

True, Dr Singh is as clean a politician as it comes. However, his inaction and silence on the poor governance by his team question his ability to lead the country. We need a PM who is willing to bring about the much needed reforms. Considering that Dr Singh is the same person who had introduced reforms way back in 1991, he does appear to be the ideal candidate for this job. But by bowing to the demands of the coalition as well as the opposition, he seems to be doing everything but his job. His job profile appears to be just helping his peers in garnering more votes. Rather than helping the country, the job for which he was appointed in the first place.

Do you agree with Mr Parekh that the Prime Minister is a blessing to the country? Share your comments with us or post your views on our Facebook page / Google+ page.---------------------------------------- Did you miss the Webinar? ----------------------------------------

Equitymaster's Webinar on the Future Prospects for the Indian Economy with Mr Ajit Dayal was broadcasted on 30th of December, 2011.

The webinar answered questions that could be troubling any Indian Investor today. Where is the Indian Economy headed in 2012? Is Gold still a good investment? Could the Stock Market touch the 21000 figure in 2012?

If you missed watching the webinar, here is your chance to access the same.

Click Here to watch: Indian Economy - From Darling to Damned (Rebroadcast)

And let's understand what lies ahead for India and how could this impact your investments.


 Chart of the day
Increasing stock market volatility has turned investors cautious in India. The direct impact of this is visible in the falling cash market volumes. Today's chart of the day shows that the cash market volumes have started coming down. In 2011, cash volumes stood at Rs 34.5 trillion, which is nearly 32% down from the levels of 2010. In fact, these are the lowest volumes since 2006. Even in 2008, the volumes were high at Rs 45 trillion. Such dwindling volumes and the resultant investor wariness have led to major losses for the brokerage business. So much so that some of the smaller brokerage houses have had to shut shop in recent times.

Data source: Economic Times

India's ambitious national highway development programme may not be termed as a runaway success. But very few can deny the fact that India's road infrastructure has certainly come a long way in the past few years. And with this fact firmly in front of them, we used to wonder what is stopping the Indian railways from taking a leaf out of the book of highways and thus do their bit to attract large scale private participation in the sector. It seems Indian Railways could finally start to open its doors. As per reports, the railway ministry has come up with a new draft policy that seeks to attract increased private participation including foreign direct investment for expanding its network. The policy covers areas like creating railway connectivity on private land, forming SPVs for new lines and up gradation of existing ones and awarding railway projects on BOT basis amongst other things. The move is indeed a good one as the existing cash flow of Indian railways will fall woefully short in providing the necessary infrastructure required to boost India's economic growth. As usual though, the most important thing to watch out will be whether the new guidelines will in fact see the light of the day. Or will they be put forever in the cold storage.

As the saying goes 'One man's loss is another man's gain'. The banking sector's loss has turned out to be a gain for the legal fraternity ever since the financial crisis struck the quality of loans across the sector. With little hopes of earning positive margins of the loans, banks hope to at least recover the principle amount from some restructure loans. In some cases this too is a forlorn task without the intervention of legal help. Hence legal firms have been in demand not just for aiding recovery of distressed loans but also buyouts of firms that are under financial stress. Companies hoping to turn around bankrupt firms have made a beeline for top corporate law firms over the past few years. So much so that many firms have set up dedicated teams to pursue such clients. While such a trend may not be very long lasting, most corporate including banks will want to ring fence their exposure to risky sectors with more legal intervention we believe.

The Indian airlines industry has been in serious trouble in recent times what with Air India and Kingfisher Airlines struggling to keep head above water. High prices of fuel, high operating costs, inefficient management and the like have taken its toll on the finances of these 2 companies with both of them looking for a bailout. But the more worrying sign is the issue of safety. Given that the industry is highly strapped for cash, not enough investments are being made to maintain safety standards. In fact, a financial audit carried out by Directorate General of Civil Aviation (DGCA) found that widespread sickness in the aviation industry was seriously impacting safety of flight operations and recommended action under Aircraft Rules and the Civil Aviation Requirements. While the Aviation Minister has strongly expressed that the government will not tolerate any violation of safety norms, there is no clarity on how the government intends to ensure that aviation disasters do not occur in the future. With near accidents in the air increasingly making headlines, the Aviation Minister will have to take some definite action if his word is to be taken seriously.

Fuel subsidies have long been blamed for ballooning Indian fiscal deficit .While the Government has been trying to play vote bank politics and crying foul over rising under recoveries and subsidies, nothing has been done on the diesel deregulation front. The reasons are not hard to find. Thanks to high taxes (exceeding outflows from subsidies), the Government has been a net revenue earner from the state run oil marketing companies so far. However, with the cut in duties in June this year, the tables have turned. If the Government chooses to continue with the current fuel pricing system, it will face losses to the extent of Rs 40 bn.

Certain setups need a rough jolt for things to be in order. The fuel pricing in India is one such set up and the net loss to the government this year could be that push to make a final call for deregulation of diesel and rationalize fuel price taxes. Is the Government ready to act?

In the meanwhile, the Indian stock markets have continued to languish below the dotted line. At the time of writing, the BSE Sensex was down by 65 points (0.4%). Stocks in the banking and FMCG sectors were witnessing maximum losses. Barring China, nearly all the other stock markets in Asia closed the day on a negative note with Singapore and Korea leading the losses. Europe too has opened the day in the red.

 Today's Investing Mantra
"It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price." - Warren Buffett

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116 Responses to "Is Manmohan Singh a blessing or a curse?"

Dr. Puthan VN Nambiar

Aug 11, 2013

Dr. Manmohan Singh is a very capable person as a follower, but not as a leader. Mr. PV Narasimha Rao, as the Prime Minister who also held the industry portfolio all through his 5 years, was the person who had introduced reforms way back in 1991, not Dr. Manmohan Singh. Mr. Rao had hand picked Dr. Singh, a very capable bureaucrat-cum-economist, as his Finance minister since he wanted some capable in that heavy weight ministry who would unquestioningly execute Mr. Rao's vision. Mr. Rao couldn't have expected a career politician to fall in line with him all the time. If Mr. Rao had not fallen out of favour with the Sonia Gandhi family, the country would have given the legitimate credit for reforms to Mr. Rao and not to Dr. Singh. In any case the country is paying the price for thrusting leadership on Dr. Singh who is not a leader at all from by any definition of that term. Some are born leaders, some achieve leadership, and some have leadership thrust upon them. Unfortunately Dr. Manmohan Singh falls in the last category.


Sundar Rangan

Nov 6, 2012

Manmohan Singh is a clean man, erudite, soft-spoken and someone who commands respect from all communities across the globe. But the fact is he is not a mass leader and cannot carry the strength that people's support gives a leader in a democracy. Even for his seat in parliament, he is dependent upon others. Such a leader has limitations in enforcing discipline and other good characteristics that he carries. He is a blessing to the extent that we can boast of a honest and educated PM. Looking back, one has to give credit to Late Narasimha Rao, who as PM boldly allowed the first phase of reforms to set in, in India. Manmohan Singh and Rangarajan would have been unknown to Indian eco-polity but for Mr. Narasimha Rao.



Jul 9, 2012

Manmohan Singh is utterly-butterly helpless. Sonia Maino's grasp over the exploitable section of our society is indeed very ingenious.

Like (1)

srinivasa V sai

Jul 9, 2012

Dr.Manmohan singh has to explain to nation the compelling reasons for his non-performance ? We cannot live only with honesty without performance! If age is coming in his way of dynamic initiatives, he cannot continue PM and doinjustice to crores of Indians!

Like (1)


Jan 22, 2012

1) He is the CEO of India Inc. A CEO-only clean organization cannot be a performing organization.
2) Times have changed -- every where. That was 1991. It is 20 years past. Performing after 2 decades more skill-sets, gentleman. I wonder if he (continues to be) an ace-Economist, why this clueless inflation, why no noteworthy strides in Industry; His govt. too hide behind the "global-crisis" bogey.
3) States do not see eye to eye with the others as well as with the Centre -- on many issues; and everything revolves around party-names, party-spokesmen (their vociferousness).
4) It is time he displays his Leadership potential -- everyday there is a new opportunity for him to solve new crisis. The country has been waiting and waiting. He could have set a new trend in Indian brand problem solving -- initiate dialogues, sit across table and don't wait for the problems grow into gangrenes!

Like (1)


Jan 21, 2012

Dr.Manmohan Singh is person who can't lead a nation from the front.In 1991 economic liberalization was that of late Narasimha Rao where he was riding on Rao's back. Why this country failed to give credit to Mr. Rao who was the father India Economic Liberalization. Let me ask Mr.Parekh what is the defination of honesty of Dr. Singh when infront of him the country resources are being loot by his colleagues and he failed to lead them from the front. Dr.Singh personal honesty has no meaning to the people of India when he preside over the most corrupt government in the world.

Like (2)


Jan 21, 2012

manmohan singh jee is a blessing to india and business man are not allowed to loot india is creating problem. Since all the media houses are governed by business tycoons. In a country where average income of poor is 55 rs. we should not talk of subsidy in fuel or taxes to be reduced. why subsidy should be given to rich and Industrial houses. As per RTI explanation Industry subsidy is 4 lac crore. fuel is 2lac crore and agricultural including all NREGA, food subsidy and Farmer loan is 1.5 lac crore. why so much hue and cry. I also know you will not publish my column bcos media is befooling the people but that wont help anymore. my earlier three comments regarding your article were also not published but any now people are being educated by me by taking local classes of poor and downtroden. JAI HIND. LONG LIVE OUR PM

Like (2)


Jan 14, 2012

What is the use of a PM who cannot control his cabinet collegues? He is heading a corrupt Govt for last 7 years. There is policy paralyis. Nothing is moving except scams. One scam after another with no sight of end. He will always be remembered as an HONEST PM HEADING A CORRUPT GOVT.

Like (2)

ajit potnis

Jan 12, 2012

I have changed my opinion about Sh Parikh after watching his interview referred by you. I dont know his compulsions but something seem to have changed lately that has made him so dovish. If we wanted just a clean and honest PM then why not Anna Hazare, at least he would have put corrupt on the mat instead of shielding them shamelessly

Like (2)

Punit Bavad

Jan 12, 2012

He is a shame on India. Worst weakest PM we can ever have,Even Sonia Gandhi or for that matter Mayawati are better PM Candidates.
He has ruined the country , closed his mouth on inflation and closed his eyes on inflation. He is a curse which has shaken our growing economy. Also since he is heading most corrupt government in this WORLD he cannot be called a clean person.
Please GOD remove him as PM as early as possible

Like (1)
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