The Indian market has now refused to dance with the rest of the stock markets in the world. The steady recovery in the Dow Jones, and the spurt in Nikkei could not ignite the enthusiasm of Indian bourses. The Index has been ranging around the bottom for quite some time now. The longer it lingers in this region, the more you get worried.

For if it does not move up, the danger of its moving down heightens. Even the normal complacency that goes with the perception that the market has only limited scope for going down gets disturbed when you see the Sensex refusing to rise.

What is the reason for the market to turn so weak?

The problems are not entirely related to the US-64 issue. It is globalisatison which is affecting the Indian stock markets. In the second phase of globalisation, Chidambaram went in for an accelerated phase ofreducing import tariffs. This was rather unwarranted as can be seen in the current predicament of the major Indian blue chips. They have been forced to face not only competition from global players, but also now from dumping.

Was Chidambaram and the finance ministry officials more inclined to please the World Bank than care for the health of Indian industry? Time is already answering this in affirmative.

No one is disputing that competition would do good for the country's industry. But in the process we have become vulnerable. Had the meltdown of the south east Asian economies had not happened, we might have well survived better. Clearly, our tolerance limits had been lowered.

The problem with the Indian industry is that it is reactive and not proactive. The leaders of the Indian industry failed to peer into the shape of things to come. Much of the present dilemma can be attributed to political roots.

The transformation from stable Congress-I led governments to coalition governments had startedhappening. It was clear that in the struggle for political power, rational economics will take a back seat. With BJP not having a majority, economic reforms have come to suffer. The continuity in reforms has been broken. The UF government earlier had tried to push ahead with the reform process.

Chidambaram had brought out a white paper on subsidies. It was to impress upon the nation how subsidies are becoming an increasing obstacle to our national progress. The idea was to arrive at a national consensus to restrict subsidies.

But in the intense struggle to capture and retain power, no government is in a position to take a hard line on subsidies. With subsidies eating into government revenues, there is very little resource left for funding development programmes. The government is caught in a vicious circle of trying to create sufficient revenue flow, while subsidies and uncontrolled government expenditure continue to eat into additional revenue generation.

Widening the tax base is the right solution,but this measure is more in the nature of a long-term goal. In the short run, the economy will continue to suffer for want of higher public expenditure. Sinha is trying to tackle the short-term contingency with the kar samadhan route. May be he will succeed in garnering around Rs 10,000 crore of additional tax revenue.

But with the GDP growth getting subdued, he again will have a problem of meeting his revenue targets for the next fiscal. We need to find innovative ways of breaking this vicious cycle of our inability to pump more funds for development and failing of flat revenue growth.

We cannot sit complacently hoping on Sinha's promise of releasing this funds for public expenditure after September. There is urgent need to find other sources of funds to feed the economic engine. There is therefore a need to market India Inc abroad so that we pull in more funds.

Luckily, the present south Asian crisis is a relief for the prudent ways of Indian economic growth. Sure our growth is not anything to talkabout in comparison to the Asian tigers.

But we have now proved that we have also been very careful about the ways we grow. Our banks have not lent out to speculative real estate deals. And, therefore, we have less need to recapitalise our banks. But, we cannot deny that our banking and developmental financial institutions have not been without blemish. They seem to have a fair load of bad lending, though not comparable to what you discover in the south Asian countries.

But certainly there is merit in our financial system in comparative terms. We must capitalise on this. The prime minister has set up an economic advisory council. This council must get down to serious business. They must avoid being shallow of restricting their view to protecting the Indian industry. They must address the problem of how to fund the Indian growth engine. And when you do that you will find it necessary to come up with figures of foreign funds needed to keep the economy on the growth orbit.

Chidambaram had earlier come upwith a figure of $10 billion annually. Probably we need more. It is only that kind of funding that will enable a higher level of growth.

The council is also ideally placed to point out the obstacles to the fund investments materialising in the core sector.

We must move on to market India Inc and make sure we get adequate funding.

We must do this quickly. We must make sure that we do not feel happy twiddling around with small bolts and nuts like the US-64 issue, but move on to tackle the bigger issues.

Financial targets must be broken down to physical targets and these targets must be attacked. These targets could be in terms of additional power generation (where we are doing very poorly), additional investments in petro-related projects and the like.

In fact if we take a close look we will find that most of the investments have come only in the power and telecommunication sector. These are not enough to push the GDP growth to a higher orbit.

There is need to push for more investments in the agrorelated industries, road developments can take in much funds, provided we are competent enough to design the reward system quickly and decisively. Bold policy initiatives will be required. The forthcoming CII conference on infrastructure offers a good opportunity to firm up concrete steps. India must recognise the limitations of its political system. Vajpayee had done good to install the economic advisory council. The ball is clearly in their court. They must push hard to make India a robust economy.

The businessmen must rise beyond their immediate concerns of protecting their home turf.