What is happening to Indian economy? For an economy which was till about a year ago the second fastest growing economy in the world, now it is threatening to slow down further?

Jim Walker: Yes, I am afraid it is threatening to slow down further, but the slowdown was already in the pipeline earlier this year, especially given what was happening with monetary policy from the RBI. It was beginning to buy into the ability of companies to make investment decisions that could pay off. So of course, the investment pipeline has slowed. The government has been the main cause of any slowdown in economic growth and of course the main cause is RBI continuing to raise interest rates, people have lost confidence. And I am afraid that stretched to foreign investors as well on the back of what the government has failed to do basically over the course of the last 2 years rather than what is done.

ET Now: The talking point this morning is the food security bill. Does it seem like the UPA government is losing the balance somewhat to say between populous measures as well as economically beneficial reforms at this point in time?

Jim Walker: I can only shake my head, the announcement about the food security bill. This really is not the time to be increasing the entitlement programmes in India. We have had NREGA, the rural employment guarantee act, we have had talk about the right to food, the right to education, the right to this, the right to that, but nobody has talked about how it is going to be paid for. And I am afraid that is what the rest of the world is concentrated on just now it is concentrated on governments who cannot afford to pay for the entitlements that they put in place. I do not know what the Indian government is doing. Has it been looking at all what was happening in Europe?

The European governments are in just deep-deep trouble because they failed to realise how badly the entitlements programmes are going to place their debt position over the course of the next few years. And India is going down exactly the same route. You will have thought they may do something, but instead we have got the food security bill that may worsen the entitlement programmes, may give the Congress a bit of chance in Uttar Pradesh. But I am afraid it is going to make foreign investors look at India and see this is not the place that we want to be.

ET Now: How much could the damage be for India's fiscal situation at a time when we in any case had a ballooning fiscal deficit? How much could it deteriorate because of the food security bill?

Jim Walker: The food security bill in itself probably would make it deteriorate that much, but it is just one additional entitlement programme, one additional increase in expenditure. We are going into a phase where economic growth in India is probably only going to be about 5% to 6% through fiscal year 2013 given the slowdown in investment. This already baked in a cake and a slowdown in exports is coming and as that takes place, I am afraid that the fiscal deficit is going to rise anyway.

So, a further programme which increases the deficit, we will be heading to 6% to 7% of GDP as a central government deficit over the course of the next 2 years, then add on 5% for state governments, then more for the electricity boards and all of a sudden, we have an Indian economy and an Indian position that looks probably the worst fiscal deficit in the world. That is just really not going to attract foreign investors and it is not going to attract Indian companies to invest again.