The quarterly survey by Burson-Marsteller, a global managment firm, tracks global institutional investor sentiment towards 32 emerging markets across six regions. The survey conducted on 10 fund managers with exposure to India who were interviewed between June 3 and July 3 revealed that six of them were negative towards India. They felt that the decision to conduct nuclear tests represented an attempt by the government to unify both itself and the country but considereed the government to be weak and divided. All the ten fund managers interviewed conceded that it was prudent for controls to remain on the Indian companies borrowing from overseas institutions in the short-term, because ofthe protection they had provided from the current economic turmoil in South-east Asia. However, they argued that internal market reforms were more important than reforms of external trade and finance barriers to trade. They identified three key areas of economic reform that were required - reduction in levels of government subsidies, reduction in the budget deficit and a fundamental privatisation programme.

The continuing crisis in South-east Asia was considered to be fuelled by the level of corporate debt within the region. Coupled with the onset of the deepening recession in Japan and the deteriorating value of the yen, fund managers predicted that the situation for many emerging markets would deteriorate before it improved in the medium term.

On a positive note, the survey noted that India's "closed economy in general protects it somewhat from external events. Any drop in exports does not harm the economy as much as in many other export led countries. Yet the fundamental problems have proved difficultto resolve. The latest budget has been roundly dismissed by investors for failing to reduce subsidies, lower the budget deficit or introduce foreign competition. Coupled with the nuclear tests, sentiment towards India has been pushed towards a new low."