The repeated terror attacks in Mumbai, and other parts of India, is the price of a poorly governed multi party democracy. One in which political parties, merely to get elected, have created and perpetrated schisms, on the basis of caste, creed, economic well being or religion. With a majority of our MPs being charged, though not convicted (a necessity for disqualification) of criminal activities, they have, obviously, subverted law enforcement agencies, who now serve their interests more than the people's. Little wonder that terrorists manage to slip in and out with impunity.
---------------------------------------- Who do YOU trust the most? ----------------------------------------
Well, only 21% of the people who have participated so far in our poll share your view.
But over 50% believe the Tata Group is the most trustworthy when it came to financial reporting.
Do you agree? What's your view?
Vote now...(Poll ends soon!)
The biggest irony is that the safest person in Mumbai today is Ajmal Kasab, who killed hundreds of innocent people! Why he is being kept alive, using up law enforcement resources that could have helped prevent the bomb attacks in Mumbai, is a mystery. He has been found guilty and ought to be hanged without delay! Every day he is kept alive also increases the chance of a hijack or kidnap, placing the Indian state and people in grave jeopardy. Why is it difficult to see that?
The reason is because we are poorly governed and have only selfish interests at heart, not those of the nation.
The Prime Minister has promised to bring the perpetrators to justice, a claim that sounds hollow, especially since he is unable to bring those who have sworn allegiance to him, in his Government, to book. If he is half serious in his intent, why does he not start with two things. One is to remove any exemption from searches for VIPs? There is a list of VIPs who are exempted from personal security checks at airports (which includes those not in Government either). Let the security agencies do their job, without fear. The attack on our Parliament happened because the terrorists used official looking vehicles and badges, and the security forces were too scared to challenge them. The threat of transfer of those who do their job, but may annoy a VIP in doing it, should be used with great discretion. The second thing is to give back the security forces the ability to do their job. The only reason agencies like the CBI are kept under political control and not transferred under the control of the Lokpal, is because the agencies are political tools of convenience.
Until we govern for the people, and not for the political establishment, terrorists will have the ability to strike with impunity.
Poor governance and absence of planning also manifests itself in other tragedies. The Kalka mail derailed, killing several people. The Railways, pressed for funds, has not insured itself against this! The Minister of State refused directions (as if he needed any!) to visit the accident site! Compulsions of coalition politics allowed him to get away with such callous disregard for people; the price we pay for democracy.
Contrast this with what is happening in China where the leaders are thinking ahead. The train from Beijing to Guangdong stops at some 30 stations and the planners felt that if they can avoid the 5 minute stop at each, it would cut 2 ½ hours of the travel time. So they came with a concept of a train that never stops!. Passengers wanting to alight climb into another compartment riding above the train, which detaches itself at the station allowing the passengers to alight at their convenience. Not only does it cut time, it saves energy since the train doesn't slow down and, by cutting travel time, gives people the option to commute by train, rather than air, more ecologically friendly.
Why should poor governance matter to investors?
For the June quarter, China's GDP growth is 9.5%, higher than ours. Its industrial production has grown by 15.1%. In India, May IIP was a disappointing 5.6%.
Whilst Chinese leadership is busy planning for the future, ours is busy doing a nano re-shuffle. The nano is the smallest of IPod shuffles, as was this one. Again, compulsions of coalition politics made the Prime Minister retain non performing ministers. This is a price we pay for our democracy.
The Government is now asking the Supreme Court to review its decision to appoint a special investigative team (SIT), comprising retired judges, to probe into corruption charges, which are taking CBI far too long to investigate. For reasons stated above. The latest episode is the news that Ramalinga Raju, self admitted perpetrator of a scam in Satyam, is likely to be let off on bail as the Court directed the investigations to be completed by end July, which are not! The opposition apparently stems from the constitutional impropriety of one arm of Government (the judiciary) stepping into the turf of another (the executive).
Yet the Government had no such qualms when a SIT was appointed to investigate the allegations against Narendra Modi.
In corporate news of interest, Jindal Steel and Power is to invest $ 250 m. in establishing a rail line in Bolivia, where it owns mines, to link the mines to the port. It would not be so allowed in India.
Inflexible labour laws are compelling some auto manufacturers to shift production to other countries.
There were three success stories of post liberalisation India. One was the telecom boom, which has now resulted in 750 m. mobile users and some of the cheapest call rates in the world. This is now being derailed because of the spectrum pricing and 2G corruption scandal.
The second was IT. Here the IT Department is trying to tax onsite work on the dubious plea that it amounts to body shopping and not software exports. The industry is trying hard to cope with the global slowdown and the problems over visas. June quarter profits for Infosys were down 5.3% and for TCS 7.9%, over the previous quarter, though up year-on-year.
The third was auto - India has built the world's cheapest cars. But auto sales are slowing down, and there is labour unrest at the largest auto maker.
Last week the BSE-Sensex fell 296 points to end at 18561, and the NSE-Nifty declined 79 to end at 5581. There are huge concerns for both Europe and for the US, where rating agencies are threatening a downgrade.
The US President is trying hard to hammer a compromise, before the August 2 deadline for US debt to hit the permissible ceiling. Failure to reach one would lead to a downgrade of its AAA status making it more expensive to raise money. In Europe, surprisingly, only 9 banks failed the stress test, fewer than expected. Investors are expressing concern by pushing up the price of gold to record highs.
If Obama can hammer out an agreement global markets will rally and the sensex can go up to 19500. If he cannot, and rating agencies downgrade USA, then global markets would drop sharply. Any rally should be a selling opportunity for now.
J Mulraj is a stockmarket columnist and observer of long standing. His weekly column on stockmarkets has run for over 17 years. An MBA from IIM Kolkata, he has been a member of the BSE. He is now India Representative for Institutional Investor. A keen observer of events and trends, he writes in a lucid yet readable style and takes up issues on behalf of the individual investor. Nothing pleases him more than a reader who confesses having no interest in stockmarkets yet being a reader of his columns. His other interests include reading, both fiction and non fiction, bridge, snooker and chess.
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 authors, Quantum AMC and Quantum Advisors do not claim it to be accurate nor accept any responsibility for the same.
© Equitymaster Agora Research Private Limited