If foreigners control our economy, how free are we?

Knowledge can be very scary. In an interview Christopher Wood, Managing Director at Credit Lyonnais Securities Asia, an investment bank, said that foreign investors have sold $2.4 billion worth of Indian equities and $978 million worth of debt, and could sell more. The scary thing is that foreign investors have invested a total of $308 billion in India, $257 billion in stocks and $51 billion in debt. Our total foreign currency reserve is $350 billion so significant selling by foreigners could result in a plunge in the value of the rupee, which will put immediate upward pressure on the cost of imports, especially fuel, pushing up inflation. Of course, foreign investors will lose when they exchange rupees for dollars but we will lose even more. Indians are reluctant to invest in the stock market because it is controlled by foreign funds and a few big Indian traders, which leaves individual investors at a disadvantage. Only 1.5% of people in India invest in stocks, as opposed to 10% in China and 18% in the US. Just 2% of household savings in India are exposed to equities, as opposed to 45% in the US. Foreigners control 70% of the market. Analysts point out that the Sensex generated returns of 17% from 2004-2014 but do not give us a breakdown. They do not tell us how many stocks have stopped trading because the companies have gone bankrupt and have been replaced by other companies. Because of greed Initial Public Offerings are priced very high, so that 60% of IPOs are trading below offer price, which means that investors lost out. Mutual funds are supposed to take away risks of investing in stocks because fund managers know when to buy and sell but charges are higher than in other countries, and companies are run by fellows, called 'promoters', who may have pledged all their shares to banks to borrow money and therefore should be operating under strict supervision. Indians have a deep distrust of markets because they have been burnt by scams many times previously, so fund managers should discourage people from investing in equity funds when the market is at a high. Recent evidence shows that they do not warn retail investors from rushing foolishly into a market when corporate profits are falling, maybe because more investments mean more bonuses. Global economy looks weak and the IMF warned that it is 'highly vulnerable'. Some predict a recession in the US within one year. Without the stimulus of US consumer spending the world economy may also go into a recession. Many central banks have introduced negative interest rates in an effort to depress their currencies which puts more pressure on the rupee. Meanwhile, our share market is holding its breath for the RBI to reduce interest rate, without which real estate prices may crash and a lot of black money maybe wiped out. 68 years after independence we are still controlled by foreigners. Not something to be proud of, is it?