Denial is everyday news now. The government denies any wrongdoing anywhere and instead castigates its own agencies for doing their job. Companies deny any poor governance when analysts question their governance and instead go about trying to discredit the analysts who are doing their job.
Politicians deny any wrongs happening in their state and instead go about blaming the media for doing their job. Sports officials are denying that anything is wrong with the country’s sports system and instead are blaming sportspersons and coaches for performing poorly in the Olympics. Asset management companies (AMC’s) are denying that something went wrong in the way they were doing their business and are instead blaming regulators for over-regulation and their woes.
Debt-ridden corporates are denying the fact that they overleveraged and are blaming the government for policy paralysis and high interest rates. The list is endless and the fact is that denial is not getting anyone anywhere except to take the economy, markets and politics deeper into the mud.
The government, instead of lambasting CAG (Comptroller Auditor General) for highlighting the issues on misallocation of coal blocks, should look over its shoulders and set things right in the way it went about accepting bids for power projects.
It does not take a genius to figure out that a 25-year no hike clause for an absurd rate of Rs 2.50/2.33 per unit (Mundra and Krishnapatnam ultra mega power projects respectively) is completely off the mark when inflation was running at 8 percent and bank loans were floating with three or five-year resets instead of fixed for 25 years.
The government should take the CAG report in the right spirit and should rework the bid price for the power projects and also rework the price for coal allocation as coal prices have shot up by 230 percent over the last eight years.
The immaturity of corporate India comes out when analysts question them and ask them uncomfortable questions. Every promoter wants a nice and rosy picture of his company in analysts’ reports and many of them even go to the extent of asking analysts to send them the reports for their approval before releasing them.
Even if a company is going down the drain and its share price has fallen off the cliff, analysts cannot question them and that is seen from the reaction of companies such as Indiabulls, DLF and RCom when Veritas put out negative reports.
Corporate India should learn to take negative reports in their stride and start to go about increasing shareholder value instead of standing on rooftops and shouting blasphemy.
Mamata Banerjee is casting aspersions on media when they report about rapes in West Bengal. She should instead set about strengthening law and order to make women safe in her state.
India is a distant 55th on the medals tally in London 2012; far out from its BRIC peers of Brazil, Russia and China, which came in 22nd, 4th and 2nd on the medals tally respectively. There has been no soul-searching on why we are far behind our economic peers (peers in growth terms) and instead the blame goes to coaches, athletes, the weather, food and politics. The government should set about having a clear cut strategy in place to get more medals on the world stage.
The mutual fund industry is blaming the regulators, government and the market for its lack of profitability (more than 75 percent of AMC’s are making losses) and lack of growth (with assets de-growing over the last four years). Mutual funds have only themselves to blame when they went chasing corporate assets into liquid funds with an implicit guarantee of capital without any capital backing the guarantee.
Retail investors account for less than 25 percent of total assets even after more than 20 years of existence. They distrust mutual funds because they were either neglected or sold the wrong products. AMCs should look within themselves and find out what value they are providing to customers instead of blaming everyone for their woes.
Policy paralysis is a favourite word for corporate India given that the market has lost value over the last four years. Policy paralysis is especially true for debt-ridden corporates that went overboard on leverage during the equity bull run in the 2004-08 period when the Sensex tripled in value.
Leveraged corporates thought the party would continue forever and when it came crashing down in 2008 on the back of the mortgage bubble burst, they found the debt hanging over their necks. Leveraged corporates should instead look to reduce debt and make their companies stronger and not go about blaming policy paralysis for their debt overhang.
It is high time denial stops and action being taken to set things right.
Arjun Parthasarathy is the Editor of www.investorsareidiots.com, a web site for investors.