It would depend on the circumstances and on what you mean by “bad”. I've seen people describe something as “bad” (or worse) simply because they don't happen to like it. We all need to resist the temptation to think we are the best judges of what's “good” and “bad”.
If you were in a situation where someone was persuaded to get up to “sing a couple of songs”, maybe at a wedding reception or birthday party and they were “bad” then yes, it would be rude to tell them so. If someone was struggling to learn the guitar and showed you how they'd managed to learn the chords to a song, it would be rude to tell them they were “bad”. In lots of situations it's best not to make negative, hurtful comments to a person who may be proud of something they've done.
On the other hand, there are times when you might be justified. If you were in a band where, say, the guitar player wanted to sing a song they'd written on the next gig then it would be fair to say, “No, because you're a bad singer”. If someone asked you for an honest opinion of their singing , and you thought they were bad singers then you should say so (although maybe a little more kindly). If you paid money to listen to a singer I guess you'd be justified in telling them they were “bad” - I guess it's “fair comment”. I don't think I'd do it though.