Indian Leaders Ruining a Good Thing

Much has been discussed about the slowing down of the Indian economic engine and when/where the next phase of growth might come from. Oil/gas, retail, infrastructure, healthcare, defense, aviation, etc. Needless to say, the lure and potential of the Indian market is as vast as the mighty Himalayas! After the initial spate of economic reforms which were kicked-off 20 years ago, Manmohan Singh’s government has struggled to rally the political leaders to agree on anything substantive when it comes to opening other sectors of the Indian market.

Let’s start with the latest example – the Indian political parties shooting down the Retail industry reforms proposed by the ruling Congress government. The reforms would have opened up the sector to precious foreign direct investments (FDI) at a time when the sector as well as the country need them most. This is what you get when you have a coalition government made up of a band-aided, hotch-potch of political parties. What politician/party would want to risk bringing to the floor a no-confidence motion when they can comfortably continue milking government coffers until the next general elections, which are still a couple of years away? Like they say – No need to shake the delicately balanced apple cart! Manmohan Singh and the ruling Congress party would rather see the country’s economic progress continue its steady decline than show strong political will to introduce the much needed regulatory and market changes.

Let me also introduce another point that really doesn’t need any introduction – the rampant corruption that has been prevailing under the Singh-Gandhi government. Political activists have been trying hard to rally the masses and get some meaningful laws institutionalized but the ruling Congress party has brought the full might of their political unwillingness to thwart any people movement that might open investigations into their financial largesse. I guess one should be expecting much from a setup that is made up of cronies and thugs at every level of administration. Yes there are a few good men and women, but they are outnumbered 1:1000.

So as you can see, nothing can be done using a bottoms-up approach (i.e. led by people) or a top-down approach (i.e. led by leaders). Yes, the situation seems pretty hopeless and bleak, especially considering that the current government and its allies will continue to wield power for at least another 2 years. Here is my forecast given the current state of affairs –

1. Economic growth will drop to 2-3% in the next couple of years
2. The housing bubble will burst
3. FDI will continue to decline
4. Rupee will continue its decline
5. India will be replaced with Indonesia in the BRIC acronym

Times like these expose the kinks in a democratic setup and the weaknesses of a publically-elected leadership that lacks qualification, imagination, and balls. I will eagerly await the next Indian general elections and hope that in the interim, the current leaders do not inflict any more damaging decisions on a delicately poised nation and economy.

Questions for You:

1. Do you think this is a hopeless situation and nothing can be done until the next general elections?
2. Which sector(s) would you pick/prioritize for sparking India's next wave of economic reform and growth?

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