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“The most barbaric and basic truth about the Indian state. That it has failed the country's poor” -Sanjeev Srivastava

BBC News Editor Sanjeev Srivastava wrote the quote above in January 2007 in an article about a series of grisly murders committed in the Noida suburb of Delhi by two men who are members of a privileged class and ignored by local law enforcement officials because the victims, all children, were from poor families who lived in a neighboring slum.

The two men were convicted of those killings this week and are due to be sentenced tomorrow in the final chapter of a case that has been a source of newspaper headlines in India for months and is seen by many as a symbol of the class divide within the nation.

The other dominant headline story today was a 152 point decline in the SENSEX in the wake of Industrial Output and Inflation data that point to likely rates cuts by the RBI as the government struggles to meet growth targets for 2009 that seem increasingly implausible. For Prime Minister Singh, still recovering from open heart surgery, this is a battle of political life or death … and India’s elections are looming.
Industrial output registered -1.97% for December, only the second negative year-over-year number since 1993. This suggests that the suspicion we discussed in our post on the 16th of last month that the declining WPI data issued then was being driven by sluggish industrial demand on the subcontinent rather than declining global commodity prices was correct.

We have had a consistently negative bias on Indian equities since we launched the firm early last year, and our thesis rests, in part, on the class divide underscored by the Noida murders. Simply put, We believe that the Indian population, grappling with rampant poverty and poor health and education services, will not be able to sustain internal consumption levels sufficient to sustain the growth levels targeted by the Singh administration.

Andrew Barber
Director