"Corruption? In India? That was present before advent of reforms: what is present now can only be termed as dacoity. In one actual instance, politicians have officially acquired farmers' land and sold it to developers for building malls and gated residential complexes. This is in court.

"It is hardly surprising that there is little enthusiasm for 'development' or reforms among the common Indian."

And:

"i have been an avid reader of your service and must say it is always a pleasure and excitement to get through to your site as a ritual...which are similar to us in terms of regimen and intensities we have in our prayers...

"on a serious note. you have been vocal off late on issues on governance and corruptions...

"being a part of a system of independent india where one grew waiting in the lines for the key liquids - from water, kerosene, milk, oil, and liquor!!...
india has had a very good run of a more than decade where improved governance, reforms, development have been a core political agenda...

"the recent series of scams...and as the PM calls instance of "ethical deficits"... have certainly exploded the links between polity and business..
the s### is on the fan... and there is more.. with the speed of the fan increasing...

"how does one as an outsider look at it when we find following series of thoughts questioning the basics of the india story....

"a. businessmen are now at loggerheads with regulators/ government (cases of tata, sahara, lavasa...) b. the democracy has remained dysfunctional with almost each of the developmental issues being deferred with dysfunctional parliament c. the on ground cost of capital is increasing d. the rising costs of land and labour (two main pillars of the india story of emergence) are now hurting e. the fiscal situation (in spite of spate of PSE IPOs) is delicate at 47rs/$ and ~$95+ crude...

"how does one believer like you look at this situations and what are the few key developments that one should watch for ..

"and in spite of these if one has a belief where does one invest in the themes in India"

David Fuller's view Thank you for these insights, and also for adding dacoit to my vocabulary.

India has a rich cultural heritage and the potential for a very bright future, provided it is not undone by the self-inflicted wounds which drag down most countries at one time or another.

India's greatest impediment to progress, at least according to most Indians that I have met or corresponded with, is corruption, to a degree that bribes are commonplace. Some also cite poverty but that is not unrelated to corruption. These problems are certainly not unique to India and I do not wish to be critical, but it amazes me that educated and sophisticated Indians are understandably critical of corruption while also accepting it as a way of life.

In a democracy people are free to speak out against corruption and to oppose it in numerous creative and constructive ways. When will India harness the energies of its free society to this end? Please forgive me if this already happening, but here are some suggestions from someone who would like to see India flourish.

From grassroots to national level, support politicians who promise to weed out corruption, and hold them to that pledge. Vote out politicians tainted by corruption. Encourage a national anti-corruption movement, engaging your free press to name and shame corrupt practices and those who engage in them. Patriotic members of the business community should show leadership by raising the bar in terms of their own ethical standards and opposing all corrupt practices.

Make sure that your children and grandchildren understand that corruption can only impede their personal achievements and those of their community and country. Press for the inclusion of citizenship courses in schools from the earliest age and make ethics a required subject throughout all higher education.

Ensure that apathy towards corruption is no longer an acceptable option.

In terms of India's stock market, which has done commendably well since 2003, it does not require any financial sophistication to appreciate that a progressive reduction in corruption can only pay dividends. In the short term, the recent publicity surrounding corruption scandals has understandably damaged sentiment, to a degree yet to be determined. The Prime Minister in particular could mitigate this perception problem, and needs to do so. After all, global investment often resembles an international beauty contest and corruption is plain ugly.

India had received generally good financial press coverage internationally, up until the recent corruption scandals, and that contributed to a record net foreign investment of $28.8bn into Indian equities by November, as reported by Deepak Lalwani's India Report posted yesterday. However, I have also seen reports that India's domestic mutual funds sold Rs280bn ($6.2bn) worth of their own shares this year.

As to whether or not record foreign buying is now a contrary indicator, it presumably depends on whether foreigners continue to buy or are frightened away. Similarly, I am undecided as to whether the domestic selling is a 'smart money' indicator or a case of: 'Those who know it best, love it least because they have been disappointed most.' What we do know is that India's Sensex tested its January 2008 peak last month and any former high of significance is a region of some karma.

(See also my comments on India posted yesterday.)