India: ripe for business

Looking at the BSE Sensex over the last year, one might think India is perhaps not the wisest place to put your money. It seems most fund managers would agree. The region is hemorrhaging money like a Weimar printing press.

On top of that, following a return to risk appetite after 2008, foreign direct investment has chosen China over India 1:5 in 2010. This is most often attributed to poor infrastructure and corruption. Never mind.

Expounding the situation at the moment is high inflation. The Reserve Bank of India has raised interest rates 12 times since March last year in an attempt to stem 'stubborn' inflation.

What seems apparent though (I hesitantly suggest), is that there is a severe lack of investment in India, and it is this, not a wide money base, that is causing inflation.

Once the RBI decides the interest rates can't possibly go any higher,  the only way will be forward and up for the economy.

In the mean time, India has many hands chasing few goods; ripe for an import business.