Change the babu mindset

<div class="section1"><div class="Normal">The stock market was volatile last week, gyrating with each blip of exit polls. Besides the uncertainty of commitment to continued economic reforms from a weaker coalition government, the market is also apprehensive about the imminent rise in US interest rates, slowdown in China''s rate of growth and high oil prices.Sensex went up in the early part of the week, after exit polls showed the NDA gaining in UP, only to fall back over the last two days, to end the week at 5,669, down 119 points.<br /><br />The back-of-the-mind fear is the consequence on the market should foreign investors were to withdraw. But what better option would they have? The spectre of rising interest makes bond markets unattractive to invest in, due to falling bond prices. The US equity markets are also not too attractive; and commodity prices are likely to fall with the planned slowdown in China.<br /><br />India still remains an excellent story, and should there be a fairly stable government the market could rally strongly. We can attract far more foreign investment if we change our babu mindset of thoughtless controls and senseless actions. <br /><br />For any emerging market to mature, the government and bureaucratic babus must help businesses by giving greater freedom and punishing those that abuse that freedom to cheat others. Our babus seem to have got it the other way round! Not a single major political figure has ever been punished, despite several well documented cases of corruption and abuse of power.<br /><br />On the other hand, bureaucrats find wondrous ways to hinder business! Last week there were announcement of acquisitions by 3 companies: the Torrent group, Dr Reddys and Wockhardt. Now it is easier for companies to obtain permission to set up a 100 per cent subsidiary and transfer funds to it for making an acquisition than it is for obtaining permission to acquire directly (which can take months, and kill any deal). So, instead of the foreign acquisition coming directly under the listed Indian company, it is done by a fully owned subsidiary. This makes little sense and must be changed to allow greater freedom to operate internationally.<br /><br />The coming week would remove uncertainties of the next government. The weekend fall makes the market look attractive, in anticipation that the results would not be quite as bad as the market anticipates. Should the babus then change mindsets and aid businesses, India can glisten. Time to buy selectively.<br /><br /><formid=367815></formid=367815></div> </div>