Why Modi must not fail - The Honest Truth By Ajit Dayal

Why Modi must not fail

15 FEBRUARY 2016

If there is one thing that frightens me about the failure of the Modi regime to take advantage of the massive goodwill of the May 2014 election, it is that the people of India will vote in the Congress Party to rescue them from the BJP's inability to deliver.

If our voters are as fickle and easily fooled as the fund managers entrusted to look after the savings of millions, then, the unthinkable may fall into the realm of a possibility.
A country ruled, yet again, by a wrong Gandhi may be reason enough to create a long term bear story for India!

So far, the BJP and Modi have failed to live up to the expectations that they helped create.
The 'Acche Din' slogan is now mocked at and reminds me of the days when MTNL was a monopoly phone provider and we had to chase the engineer to come over and repair the perpetually disconnected phone line.
"The engineer will come to see you", was the deadpan response of the lady behind the counter at the MTNL complaint desk.

It was a false promise made to make us feel good with no real intent to actually make us happy.
Were the BJP's vows to build an economic development plank then merely words - on powerful social media platforms - to win votes?

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India has benefitted greatly from the regime of lower oil prices. Since August 2014 - when the collapse in oil prices began - India has saved probably close to USD 100 billion from paying less for a commodity that it relies on very heavily to fuel its economic growth.

Table 1: Uh, anyone voting for the Congress Party again? .
  August 24, 2013 May 24, 2014 May 23, 2015 February 11, 2016
Party in power Congress BJP BJP BJP
S&P BSE-30 18,519 24,793 27,957 22,952
USD/INR 64.00 58.36 63.53 68.30
10-Year Indian Gov. Bond 8.30% 8.60% 7.86% 7.72%
MSCI EM Index (in USD) 933 1,043 1,038 713
MSCI World Index (in USD) 372 418 441 353
Oil (USD/barrel) 106 104 60 26
Gold (USD/oz) 1,398 1,293 1,206 1,247

Source: Bloomberg

Besides the good news on oil, there is little other cheer for the government. The INR has lost nearly 15% since Modi took over and the BSE-30 Index is down nearly 8% from May, 2014. True, India has done far better than the MSCI Emerging Markets Index but Brazil, Russia, and China are so messed up that any comparison with them is not good.

The Interim Budget of July 2014 was a dull one. The February 2015 Budget was rated as an 8/10 and above by many businessmen who probably had their reasons to praise the government!

This Budget in February 29th is Modi's last chance to make a significant mark.
If he fails to do so, be prepared to see a new era of suffering under Congress rule.

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Disclaimer: The Honest Truth is authored by Ajit Dayal. Ajit is Founder of Quantum Advisors Pvt. Ltd and Quantum Asset Management Company Pvt. Ltd. The views mentioned above are of the author only. Data and charts, if used, in the article have been sourced from available information and has not been authenticated by any statutory authority. The author, Equitymaster, Quantum AMC and Quantum Advisors do not claim it to be accurate nor accept any responsibility for the same. Please read the detailed Terms of Use of the web site.

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18 Responses to "Why Modi must not fail"


Mar 25, 2016

Dear Sir,

Principally, I endorse the opinion of Shri Lakshman Iyer. However, since movement of stock market prices are invariably linked to Govt's failure or success or whatever, it is pertinent to assess the govt performance on the economic front/handling of issues and not breach the line to lean towards political part of the discussion.
Whether it is BJP or anybody else, the phenomenal damage created earlier cannot be addressed or redressed that easily. If anyone would recollect, the present PM requested for a 10-year period to turnaround the economy. Though many of the bang bang policies and vociferous reforms are not really percolating down into effective actions, at least the direction is more clearer.
Unless the component of imports into India reduces, forex movement in favour of India cannot be expected. And 2 years is not a good enough barometer in terms of time to expect miracles to happen. We have to wait and watch.



Mar 16, 2016

If Modi fails to deliver then a fickle voter has other options like Arvind Kejriwal.

Kanhaiya Kumar has proven only to be a great speaker - a demagogue more likely - necessary but not sufficient for effective leadership.

There also remains one possibility, rather remote, that the Nehru Gandhi clan might allow a non Gandhi to take over the leadership.

On balance it is clear that we need a system of checks and balances. A Government with BJP in complete control of Centre and States - Lok Sabha + Rajya Sabha could prove to be detrimental to the country and encourage fascist forces who bring their Hindutva bigotry & Hindu Rashtra to the fore.

Fascism even with Development could be a deadly combination for the Idea of India as envisioned by the noble framers of our Constitution.


Vasant Shukla

Feb 28, 2016

I think Modi is neither going to succeed or fail. In the broader scheme of things no individual matter. The country is made of its people and neither Modi or MMS can make a difference. Let's debate about the country and its problems and not about Modi or MMS. I think we will be doing good or bad inspite of Modi or MMS.

Like (2)

Nand Kishore Aggarwal

Feb 19, 2016

People have voted Modi as they have high expectations from him, However limitations are many;though he be labelled as Autocratic yet he is bound by democratic framework which moves slowly. First he has to unmask entrenched intelligentsia in ruling corridors ( IAS, IPS, Judiciary Big Corporate houses ) which is selfish and has no concern for the poor but since Implementing reins are in their hands therefore he can't do it overnight. He is working in a mission mode and we all need to support him.

Like (1)


Feb 18, 2016

After reading this, my respect for the writer evaporated completely. He sounds clueless and does not seem to be knowing who is responsible for the state of affairs. Just read ex PM manmohan's statement. MMS categorically stated that " forget GST" , if you don' give respect to Sonia and Rahul. Does not it mean that respect to a family is more important than the all important GST bill? In such a situation, is it not impossible to bring any legislation? It is not modi's failure but desperation of others yo see Modi fail which is causing havoc.

Like (4)


Feb 18, 2016

Dear ajitji,

I wonder how you can say the modi government has failed ? A lot of effort is being put in by the govt. to revive the economy. It is a pity that people expect everything to be done in 1 or 2 years conveniently forgetting the mess left behind by congress & its allies who ruled for more than 50 years. pl. take in to account the delibrate parliament lokjam used by opposition to oppose each and everything.coupled with some biased media ( patronised by congress & psudosecularists )who could not fathom the crushing defeat of the congress & its allies. Let us give this govt. time & we will see the results.

Like (1)

Zulfiquar Singaporewala

Feb 16, 2016

Dear Sir,

For any new govt. to get job done is difficult.
Modi Govt. has done a lot to gain ground for investment in our country.
If we had given chance to rival for more than 50yrs we have to wait for at least one term for Modi Govt.
If we see infra structure one can see the change has started , same will be the case with more industrialization.
If Modi fails than it is for sure that we will be in deep recession not due to global cues but due to our internal failure.

Like (7)


Feb 16, 2016

Why everyone forgets that Indian economy was in shambles when BJP took over, and first priority of BJP is bring fiscal discipline. Last FM knew that they are going to loose elections and he decided to carry forward the expenses, it should be made a criminal offense. Tax payers are now getting refunds which were due for last more than 10 years. No one has heard about corruption in the last 2 years. Corruption is a big evil, communalism is just a bogey raised by people who are interested in corrupt regimes.

Like (2)


Feb 16, 2016

Development and communal politics can never go together. Modi has to be kicked out as soon as possible. It is very dangerous for the democracy that such person with dangerous dictatorial tendency survives as PM. He is killing all institutions as per his whims. The bad effect of all those are visible now. Equity masters' assessment on this count is a disaster. Modi is died in wool RSS person. RSS main agenda is communalisation of this country. Communal politics has never brought peace in any country. It bring strife and disruptions . Strife and disruptions can never be healthy ground for peace and progress of the economy. The agenda which is blatantly communal, supporting his own cronies and based on corrupt machination for winning elections can never bring development.

Like (6)

Thirumurthy R

Feb 15, 2016

Yes, if Modi fails to deliver and Congress with its left leaning intellectuals seize power India may once again become not so attractive as an investment destination. That said, low oil and commodity prices may continue, China may take time to bounce back and the US, Eurozone and Japanese economies may languish for some more time and India may the best among emerging markets The crucial factor that may undermine India's image is corruption and bribery. At the level of the Central Government if any Party/Parties can gain public confidence as incorruptible they will certainly do India a lot of good. As things stand now Modi Government is way better than the Congress on thia score. This is the important factor that may swing our view in favour of wanting the Modi Government not to fail. People may give this Government more time to show more tangible results of achche din. Absence of corruption at the level of the top and middle levels of the Modi Government, as attested by many captains of industry and business, is itself achche din, in a fundamental way. However a lot more needs to be achieved in a palpable way for people to say emphatically that Modi has indeed delivered.

Like (1)
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