76 Year old Prime Minister Singh left the intensive care ward today as he recovers from open heart surgery performed over the weekend. Doctors expect him to begin doing some work within “two to four” weeks.
This is a difficult juncture for India to be without the Prime Minister as the economy continues to teeter and the response to the attacks in Mumbai last year is still foremost on voters’ minds. The press has seen Mr. Singh’s recuperation as an opening for his INC rival Sonia Gandhi, leader of the most politically powerful family in the nation, to advance her 38 year old son Rahul to the forefront of the party (see chart below).
Wholesale Price inflation saw a slight uptick this week, 5.64% Y/Y vs. 5.6% the prior week, suggesting that the trajectory of disinflation may be starting to flatten. Regardless, the government subsidy level for gasoline and other fuel was cut for the second time in two months, helping to assuage the masses.
We are currently short Indian equities via IFN and continue to believe that the economy there faces profound structural hurdles that cannot be overcome by a populist coalition –no matter who leads it.