Speaking here on the sidelines of the World Economic Forum (WEF) annual meet, Sharma said the AAP's success in Delhi does not mean it would be replicated elsewhere in India.
Asked whether AAP was adding to uncertainties, Sharma said there may not be a need to worry as this was like a "localised storm" and Delhi is a city state.
"It is true that they did well... that does not mean that it would be replicated elsewhere in the country. Also, what they are doing is populism of absurd extremes which is pushing the society towards anarchy," he added.
On investor sentiment, Commerce and Industry Minister Anand Sharma said India's economic potential and policies continue to attract businesses.
"Investors are looking at potential of India and they are bullish because many of the policy decisions that we have taken like opening up of various sectors such as aviation, defence, multi brand retail and raising sectoral caps in different sectors.
"This has gone (down) well with the investors and they understand that India is committed to creating an ecosystem or a policy regime that is not only open, fair, predictable and forward looking, but it is also supportive of FDI," Sharma said.
Sharma said despite the global economic downturn and strong headwinds, India still remained one of the top three most-favoured destinations for investments.
"Now some of the research reports are placing India at number one. So, India will remain a top destination for investments in the years to follow. It is not only about FDI but also the technology and the expertise," he added.