Huffington Post, 710/7/2012
India Is No Longer (In)credible
Georges Ugeux is the Chairman and CEO of Galileo Global Advisors and Adjunct professor at Columbia Law School
The cover of Time qualifies Indian Prime Minister Dr. Manmohan Singh as "the underachiever". As expected, this cover has completely infuriated the partisans of the ruling Congress party, who displayed their usual sense of denial. Everybody who wants to play a role on behalf of the party in the 2014 election paid tribute to the prime minister.
The ministers are accusing multinational companies of planting the story. First Post accuses this of being a marketing trick.
Having been to India several times a year since 1997, and working closely with Indian groups, I actually thought that the Time article was balanced and even favorable to Dr. Singh.
Few of the reforms he announced were implemented, and he is in fact a non-achiever. Behind his legendary light blue Sikh turban and his undecipherable smile, lies the combination of a brilliant intellectual and a man who displayed no courage and an incapacity for action. It is precisely for that reason that Sonia Gandhi chose him. She rules. He manages.
He decided one month ago that he would become the finance minister and kicked Pranab Mukherjee, the current finance minister, upstairs. He is likely, after having been the worst finance minister of recent Indian history, to become India's president. That promotion for a man who has the responsibility of a one-year 50% decline of the value of Indian companies (30% the deblacle of the rupee and 20% the loss of the stock market) is a shame.
But Dr. Singh is not a scrupulous man. In his first term he openly accepted notoriously corrupt Cabinet members and took excuses from the Communist members of his coalition not to implement his reforms. When he got rid of the Communists in the second term, he simply did not implement them without explanation.
The Congress Party is in disarray, and "Gandhi Ltd" is rumored to have amassed a fortune in the billions of dollars through the corruption machine of the party.
Where India failed is its contract with the Indian people. While over the last 12 years, China's GDP per capita went from $2,000 to $8,000, India's went from $400 to $822 million. The average Indian is ten times poorer than the average Chinese person. This is an absolute shame and a huge potential for social unrest.
Time for sober reassessment of India
The damage done to India by its government and its corrupt politicians should not affect our assessment of the importance of the country. After all, corruption is unfortunately widespread around the world. India is much better than its political system.
India has a corporate world dating back over a century, and Indian tycoons have been citizens of the world for generations. The correction in valuations presents probably the best opportunity to invest in the country and acquire Indian companies. With hindsight, India was overvalued.
But it has several groups whose value largely exceeds $10 billion and remains the third largest Direct Foreign Investment destination after the United States and China.
India has to open up to the reality. It is not God's nation and its reality and performance is falling behind in a number of ways, particularly energy, water and infrastructure. The level of underdevelopment of its rural area is abysmal.
But India has formidable potential and is a country to focus on. Many leaders see the reality with open eyes and are driving their business into international expansion. They will be leaders in the creation of Asian multinationals.
In this effort, they unanimously agree that Dr. Manmohan Singh has been an underachiever. The words of Time were moderate when one compares them to the political rhetoric in India. But here, like many nations, Indians are willing to admit their weaknesses in India and do not tolerate when it comes from abroad. Tough luck. The world has already taken the measure of Dr. Singh's legacy, and it will not be as brilliant as its intellect.
India is not a miracle. It is an opportunity.