This, incidentally, is what one anxious investor asked Finance Secretary Montek Singh Ahluwalia during the two-day Euromoney investor conference a couple of days ago in the capital. What, he asked, were the government's calculations on all these matters when it went in for the nuclear tests. Please don't keep telling us that everything's all right (and the children are well too!), give us a realistic assessment, he pleaded. After all, if we know now what's going to happen, we might still be ina position to do something to cushion ourselves.

Montek, being Montek, gave an explanation that only he has the ability to carry off. We can share our perception, he said, but life is full of uncertainties, let's not blame all of this on the sanctions. After all the East Asian crisis, he argued, has also contributed to our current problems by throwing all economic calculations out of gear, and often enough the outcome of things are not pre-destined.

Most of what he said is correct, incidentally, though I must confess I didn't really understand the bit about outcomes not always being pre-destined. What Montek couldn't obviously say, of course, is that many of these fears have already come true. That interest rates, especially those abroad, have hardened and it has become more difficult to raise funds. But the reason why it won't make too much of a difference is that few people are making big investments right now anyway!

That's right, with the rupee continuing to plunge, it doesn't really make much senseto borrow abroad after all, if you have to repay Rs 45 for every dollar borrowed, while you got only Rs 42 initially, this means the effective interest rate becomes prohibitive. So there aren't too many companies whose GDR/ADR plans are getting affected! And with few big projects such as those in the infrastructure sector getting cleared, there aren't too many companies who have really tested the global markets either to see if infrastructure funding is that difficult Enron is likely to tap the markets by the end of the year, or early next year. The only company which has tapped funds abroad recently is the Power Finance Corporation, but that was for a mere $100 million. Here too, since a large chunk of this was subscribed to by Indian banks, one can't really assess how much interest rates have gone up for Indian borrowers in global markets. As far as lending from the multilateral funding agencies such as the World Bank is concerned, similarly, loans already sanctioned will continue to come into thecountry.

If you look at the annual inflow of funds from agencies like the Bank, most of the inflows consist of disbursements made for loans made in previous years: typically, disbursements of loans are made over 7 to 10 years. So even if no fresh loans are sanctioned, as has been happening over the past few weeks, this won't really reduce this year's inflows. The crux of the matter, as the finance secretary told Euromoney delegates, is that India needs a lot of investment capital if it hopes to increase its rate of growth, and much of this would have to come from foreigners. The problem, however, and this was exemplified by the responses of all delegates at the Euromoney conference, is that few investors, especially those from abroad, really want to touch India at the moment.

The reason is simple: they don't really know what the government's policies are all about. While one arm of the government talks of wanting to woo foreign investment, another negates it immediately. Apart from the disastrous signalssent to investors by the Budget and the accompanying back-tracking fiasco, there was the matter of the electricity regulatory authority bill where the government backtracked so completely that it defeated the very purpose of the bill to begin a process of forcing the farm sector to pay, over a period of three years, at least half of what it costs to produce the electricity they consume. Interestingly, it's been close to 60 days since Prime Minister Atal Behari Vajpayee told industrialists at the Confederation of Indian Industry that his government would eliminate major economic roadblocks within a period of 90 days. Among other things, he vowed that all infrastructure projects above Rs 100 crore would be reviewed by the PMO, that the FIPB would be given more teeth and would clear foreign investment proposals quickly. The Budget, in fact, has talked of designating an officer from the concerned ministry to ensure that foreign projects get all requisite clearances quickly. Now, it is possible that the PMO isreviewing all infrastructure projects, but there doesn't seem to be any evidence to show that anything has been speeded up. Nor, if you talk to investors, are clearances being got any quicker. To be fair to him, though, Vajpayee has asked his Cabinet colleagues to be a bit circumspect, not to send contradictory signals to investors. While that's certainly a good start, it's not good enough.