It looks more and more that the so called phenomenal growth story of Indian Economy during the last two year has more to do with Foreign money being allowed to flow freely to buy shares of Indian companies in the Stock Market. Higher interest rates in India and less transparency in the stock market ensured an advantageous playing field for FIIs to speculate in the Indian Market.
Result - The sensex boomed, Rupee appreciated and Government showed it off as a sign of their success and an indication of the success of their economic (sic) policies. And riding the wave, Government kept quite, when they should have restricted FII investment in stock market while making them invest more in long term infrastructure development projects, as China did. This would have ensured limited reverse flight of capital.
Now, when the FIIs' are liquidating their short term investments in India and running away, Government is hapless and blaming the global crisis for the rupee depreciating to less than 50 mark and sensex crashing to 9000 level. The run seems to continue unabated.
We know Manmohan Singh is a failed politician. But at least we believed the hype that he was a top notch economist. Now it seems that he is a disaster as an economist too.
This was the defining moment, for him to show what he was made of as a reputed economist. This was where he was expected to step in and show leadership, not on the nuclear deal which looks more and more murky now.
Alas! As in many other areas, he came up short even in his area of core competency. There in lies the tragedy of our country
