Valuations are currently at a small premium to long-term averages, hence can’t be termed as expensive. They are fair, factoring current corporate earnings as well as potential higher earnings in the future,” Jayesh Gandhi, Morgan Stanley.
“Investing in India makes sense as it will create long-term wealth for you,” Nilesh Shah, ICICI Prudential AMC.
“It is our belief that three factors — a savings rate that is upwards of 30 per cent, strong domestic demand and a young population — would likely spur India’s GDP growth over the next decade at a sustained level of 9 per cent, annually,” Rashesh Shah, Chairman, Edelweiss Group.
Clearly, these stock market professionals quoted in The Economic Times are extremely bullish about the country. One question that has been persistently nagging me in recent weeks is: When will the reality of public institutions and governance start affecting the numbers? Can the two remain apart, indeed diverge ever more, forever? And, the more I think about it, the more I am convinced that you cannot have too big a gap between the quantified economy and the qualitative reality behind it. Perhaps, it is already too big.
And the reality includes the ever-growing income inequality; extreme left agitations affecting an ever larger part of the nation; increasingly ineffective and ever more corrupt governance lately extending even to the judiciary; an environmental agenda and continued and endless delays over land acquisitions that threaten to put an end to all new industrial and infrastructure projects; the casteist divisions manifested in the khap panchayats’ decisions to kill those committing the “crime” of inter-caste marriages; the caste-based reservations and quotas that are likely to be deepened by the census; the netas fighting a very vocal and unseemly battle to get their pay, allowances and perquisites increased. As for the last one, surely the public sector trade unions are salivating over the thought of how this would make their job easier in the next round of pay revision — how I wish for the days when I was the president of a very powerful trade union in India’s largest bank!
Let’s forget the numbers for a minute. So, given a choice, should one invest in such a country?
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Perhaps the questions about governance start right at the top. Rightly or wrongly, one feels that our leaders should not only lead, but, like Caesar’s wife, be seen to be leading. Generally speaking, our prime minister and the president of the ruling party have been silent on too many raging controversies and important problems. To give only two examples, Kashmir continues to burn and there is the ever-present threat of Islamic terrorism. Also, there are obvious discords between some of the party leaders and important ministers on how to tackle the threat of increasing Naxalite power, and some ministers publicly sympathise with their agenda. (From what I recall, the prime minister has made only one statement about Kashmir since the present agitation which is now well into its third month.) The Congress president has now revived her super-cabinet, the National Advisory Council, a body with increasing power over the social agenda and no responsibility for its implementation or fiscal consequences. In a way, the reticence of both the Congress party president and the prime minister to take on issues in public fora and try to mould opinion are understandable — both are poor public speakers, clearly a weakness in a democratic leader.
Perhaps the biggest weakness of our governance is the bureaucracy, the babus even more than the netas. The latest, and perhaps most bizarre, example is that of Vishwanathan Anand being asked to produce proof of his Indian citizenship for accepting an honorary degree from an Indian university, and that too by the babus in what is termed the Ministry of Human Resources Development! A parallel is the biased, right-wing minority questioning President Obama’s birth in the US. But they, at least, have an ideological agenda; our bureaucracy does not, and in any case should not, have it. To be sure, the minister promptly apologised.
But, apart from the larger question of why Indian citizenship is needed for conferring an honorary degree and why the babus’ approval is required, the fact remains that it is this bureaucracy on which our netas depend to carry out their social agenda; a bureaucracy that has become so lethargic, so inward-looking after decades of zero accountability even for acts of commission, let alone omission, that it has little left of anything beyond the wording of procedures. And why should it apply its mind to issues when every Pay Commission increases its salaries and allowances substantially regardless of productivity and performance?