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Suddenly the talk is not of easy returns, unending high growth, or ‘India arrives’. The chatter is increasingly of risk.
"All these events have added to a sense of more risk in India," said V Ravichandar, Managing Director of Feedback Consulting in Bangalore, which advises multinationals on investments in India.
"There is a squirrel attitude. The winter could be long and cold."
Satyam Computer Chairman Ramalinga Raju quit on Wednesday in India's biggest corporate scandal in memory, after revealing profits had been falsely inflated for years. It has been called India's ‘Enron’, raising suspicion there could be other skeletons in the closet of India's corporate boom.
It all came at the wrong moment for India, a combination of problems that punched a hole in the self-confidence -- some say cockiness -- of executives, politicians and middle-classes.
Only in 2007, India wallowed in success. Tata Steel made a $13 billion bid for Corus, the country's biggest foreign buy. A trillion-dollar economy grew at nearly 9 per cent. India won its first major international cricket cup in 25 years.
Many people are still bullish about India in the long term.
But these new insecurities may impact on the economy, where there are signs investors are reeling back from ambitious plans, to politics, where growing insecurity among voters could add to the unpredictability of general elections due by early May.
Take politics. The Congress-led coalition government is battling BJP. The insecurity bodes badly for Congress in its hopes to retain power.
But that insecurity could push voters to a ‘Third Front’, smaller regional parties with charismatic but controversial leaders - like Mayawati - that send shivers down many investors.
"Anyone in power in India has to be worried," said political analyst Mahesh Rangarajan. "Indians walk on very thin ice. There is no social security, job security. A third force may be able to take advantage of this insecurity.”
The decision of Tata Motors to pull out of West Bengal state in October after farmer protests against a factory for its low cost Nano, billed the world's cheapest car, also shocked India.
For all of India's optimism, it was a reminder that the country of sprouting shopping malls still must deal with the more than two-thirds of Indians who live on less than a dollar a day.
HITTING AT INDIA'S HEART
The attacks in Mumbai that killed 179 people in November hit at the heart of India's growth story -- many wealthy hotel guests from politicians to foreign investors that had long touted India.
And if anyone wanted a sign of a dip in middle class confidence, look no further than car sales, which dropped by nearly a fifth in November, the worst fall in eight years.
"That aggressive Indian feeling that 'we are there' has gone," said Rangarajan.
Now the data is increasingly scary. Industrial output fell for the first time in 13 years in October.
After a six-year bull run, stocks fell more than 50 per cent in 2008, its worst slump ever, and 17 IPOs worth more than $10 billion were withdrawn in 2008, Thomson Reuters data showed.
"Once rosy, the same project is now seen as risky," said Saumitra Chaudhuri, a member of the Prime Minister's Economic Advisory Council. "People don't want to seize the opportunity as much as before. It was much easier to raise money last year."
Foreign investors are also cautious. Many executives, already having trouble amid a credit crunch persuading their CEOs to invest in India, have postponed meetings since Mumbai.
Other Indians are waiting for the first quarter to see if hotels get packed, the norm during one of the most popular times to do business in India because of the temperate climate.
For some, the risks are creeping up.
"India's low-cost advantage is well preserved at this time. It's still an attractive investment destination," said Bundeep Singh Rangar, Chairman of IndusView Advisors, an India-focused M&A firm based in London:
"But no matter how great the cost advantage is, if safety and reputation are suspect, then that's not good. We've also got a critical election coming up, and often political goals don't match economic goals."
"You've got a downturn, terrorism and scandal. Yes, the growth, even at 7 per cent, is still attractive, but do you want to go into a market that has all these other issues?"
That said, many investors see India rebounding.
"Many have realised that Indian is not an island," said Russell Parera, CEO of KPMG consultancy in India.
"But the underlying fundamentals are still attractive."
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Welcome to India. Here everyone is free to speak their views freely. People living in India constitute of hard workers who can come out of any difficult situation. Even though it might take people life times. During bad situation, I would suggest to keep head held high and do not listen to people talking negative things about your motherland. Even though such people might be your counrtyman themselves. There are lot many people who wants to talk negative things, whatever they say creates negative energy. So just ignore them. India is white elephant and no one whether be it politician, executive, dictator or xyz, can change its path and destiny. So guys those who want to create negative energy, keep on doing so, but make sure when you sleep, you wear your underpents. Because if some day elephant mistakenly looked towards you, you might get wet or do potty.
thve got toe article by indian CRY blaming sonia for the satyam saga smacks of insanity.u r sick my freind how can u go about blamiing sonia.u have a very serious problem off paronoia.
India is one of the corrupt land, its politicians, burocracy, business or say any...just paydirectly/indirectly you can get anything. This cancerous system has flourished from topto bottom thru out the system, and can get free too since the judiciary itself is 200yrsold, and its no wonder for me that such things happen. Unless these behaviours ischanged nothing will change in that soceity and next will follow. How much and howmany have happened, uneducated politicians criminals,film stars, and families arethe rulers of india whom they keep permenent vested interests, not its people.
I am feeling very sorry, but it appears to me India will not exist in the map of world more. And i think its right such corrupt country does not have any right to exist.
You don't need to be so sorry for India Mr. Saqlain! And look who is talking about being corrupt! Obviously you cannot see your own bottom. You better start worrying about pakistan being wiped out of the world map, if you haven't already!
Mr. Saqlain, What a beautiful day dream ? Be careful, Indian missiles might take pakistan out of world map. And you will be a second Somalia. Come on man do something for you illetrate and hugry people of pakistan.
The India that Nehru, Indira, Rajiv, Atalji built so diligently has been decimated in the short span of 4 years by Sonia Gandhi. She has brought India to its knees.cry India cry...
I believe there is something which is still not known to the public about Satyam Scam.At this bad time Employees of Satyam should unite and work together even if it is with great sacrifices and make Satyam once again a leader in Indian Corporate Scene.It gives them an opportunity to show what extent the New Generation of India can go to support their Company in case of such acute crisis.
I am not sure why you are writing such a depressing story. India and the world will bounce back and back to high growth. Take it as a buying opportunity - it will not come again for next 4-5 years, which will be at higher level.
It would be better for SEBI to protect innocent investors before it is too late.Even SEBI image is getting worst in this case.Today Innocent investor have sold shares at a very low price as operator placed their order at Rs 12-15 and then it was moved to Rs 22-25.This is only gains to operators while Innocent Investors are dead.Why a company with no future is quoted at Rs 110 (Rs 10 paid) and operator are busy operating the shares without any SEBI restriction.SEBI should check todays records about the fall of price to Rs 6 and upto Rs 25. Since on wednesday market got the news and today picture was clear about Satyam then who is operating the shares?SEBI should immediately stop trading in this shares.
I dont understand what the hell are you talking about? Do you yourself understand?
Mr.Shiva is conveniently leaving out other names such as Advani, Modi, Subramina swamy, Jayalalitha, for reasons best known to him-Not very difficult to guess any way.
Why are you not adding Advani, Subramainyasamy, Jayalalitha ,Thakerays Modi, the MP who was involved human traficking etc etc? Any secret?Things will change when you shed your Caste arogance.
We have only 1 Satyam but USA has many Enrons. Indian accounting standards are more conservative in approach. We hear that common accounting standards would come into effect across the world from 2011. So, are we going to become more American in terms of Financial frauds?
Ramalinga Raju has given a new meaning to satyam which means- truth. Now satyam is synonymous with fraud or asatyam
Defeatist article... Did Enron, Worldcom, Madoff and myriad others put an end to US as an investment destination. Reporter, India is a broad story with hundreds of sectors and thousands of opportunities. Not one or two companies...
India will change when voter stop seeking money and when an election is moneyless. For example I like enter in politics but I don't have money , so I can't win. That's how our old politicians corrupted our nation. When politician like Karunanidhi, Gowda , Mulyam singh , Pawar extra still how India will change. For me Satyam scam doesn't surprise me. I still believe more scam ahead. It's India q place for all sort of corruption.