Leadership in Crisis

Yesterday Sensex lost 800 points and has been on the losing streak throughout the week. Same has been the case of Dow, Nasdaq, Nikkei, Hang Seng and all the other bourses across the world. On the other side Rupee is on a continuous decline since the crisis intensified.

Are we seeing worst of times? As finance professional the events are overwhelming. How deep this shit is? How long will it continue? How many participants will it gulp? What does it take to get the confidence of players back? Since nobody has clear answers it’s leading to fear. And fear has no rationality. Further it has dented the trust levels and trust has not substitute. Majority of the business is transacted on trust. Even at work, we deal with our colleagues on trust. If one were to have everything in writing, it would be nightmarish to work. But once you lose trust on someone, then the team cracks. That’s what is happening in the financial markets. With trust taking a knock no amount of reassurance is working. It’s driving the stock markets throughout the world southwards. Every index has been shedding throughout last week leading to massive erosion of wealth and savings besides severe damage to investor confidence. Survival is becoming a big issue for most companies. But where is the Leadership in India to address these issues ?

I wrote sometime back that it appears a crisis of liquidity and not much of solvency. But slowly solvency concerns are catching up making it even worse. Rumours are running thick and fast. Slowdown is imminent. We need to accept it. Its first cycle for majority of the young Indians and they are finding it tough to digest. We are only 4-5 months into this turbulence and its already giving churns – what happens if this continues for another 1-2 yrs ? But how are pilots of this plane behaving ?

Central bankers have been making concerted moves but it seems they misjudged the extent and hence every move appears insufficient and poorly thought of. Indian situation is even more peculiar as just days back we were sucking liquidity from the system. Now it’s the other way round. Depreciating Rupee and inflation is not helping us either.

What is disappointing is the lukewarm and half-hearted response from the Indian authorities. It has been stale and reactionary. Further if we nurture ambitions of global leadership, then we need to lead from the front and provide visionary leadership. Most crises precede with signals and leaders pick that up early start acting. In this crisis signals were visible since 2007, unfortunately till recently we were not even acknowledging this issue, shrugging this off as a ‘rich country’ issue. We live in an interconnected and interdependent globalized world – then how could we believe that this crisis wouldn’t wound us.

This crisis had provided a unique opportunity to India to stand up and get counted and we let it go. Leaders are born and their characters get tested in crisis. We on our part chose not to even participate - that’s not leadership, especially when aspirations are high to play at a world stage. One needs to share the risk and rewards of being a world leader. Though we missed acting in crucial moments, its never too late. Next two weeks will be crucial. We need to be courageous in approach and action if we want to see Indian flag amidst US and European ones and replace someone in G-7 or may be form A-3 or 4 ( Group of Asian Tigers ).


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