BY PATRICK JONAS

THE monsoon rains may have eased the temperatures in most parts of India. But to the overseas investor, India is getting hotter.

The faith of the electorate in prime minister Manmohan Singh and his allies has led to the return of confidence and India is now one big temptation as an investment destination.

Of late, more and more investors are falling to India's seductive appeal and pouring in funds.

According to Thomson Reuters data, overseas investors are the biggest buyers of new shares from India, where companies have raised more than $7.5 billion in equity so far this year, surpassing the full-year total for 2008.

In July itself, foreign institutional investors made a net investment of US$1.16 billion in the domestic equity markets, showing their confidence in the Indian markets.

While the rest of the world is still holding on to hope that the economy will start its upward movement, India is already gathering steam in its efforts to ramp up its growth.

Two recent surveys done by the Reserve Bank of India - Survey of Professional Forecasters' and the Industrial Outlook Survey - show that the Indian economy has stabilised and is ready for a sharp rebound.

The first survey shows that India's economy is projected to grow by 6.5 per cent during the current financial year against 5.7 per cent forecast earlier. As for next year, it says the growth rate could rise to 7.5 per cent.

tabla! spoke to some Singapore-based observers who have their eye on India for their views on why the country is so attractive to investors.

Says Mr David Cohen, director, Asian forecasting, Action Economics: 'Indian GDP growth held up relatively well in the face of the downturn in the global economy, and now appears to be picking up amid signs of revival in the world economy.

'Like many other emerging Asian currencies, the rupee came under pressure amid the investor flight to safety during the recent financial crisis, but has firmed from its March lows on renewed risk appetite.

'Going forward in the face of anticipated continued economic recovery, investors should be attracted by the relatively strong growth rate, and substantial size, of the Indian economy. It should help fuel ongoing improvement in economic performance.'

Mr Rajeev Malik, regional economist for Macquarie Securities, says the Indian economy is positioning itself for a new growth trajectory following the recent sharp - but short - economic downturn owing to the global credit crisis.

'GDP is likely to increase 7 and 7.5 per cent in FY3/10 and FY3/11, respectively. Overall, the combination of the game-changing election verdict, along with improving capital inflows, will push growth in the largely supply-constrained economy closer to the realisable trend annual growth of 7.5 to 8 per cent,' says Mr Malik.

He feels that investors should 'embrace the new economic cycle, despite the view that Mr Manmohan Singh's government is unlikely to become a born-again government that will favour big-bang reforms at the expense of policies that favour the common man'.

'Consequently, while it will move forward on some long overdue economic reforms, it will maintain the populist drip for the poorer sections of society.'

The Congress winning the elections has contributed in a big way to the rise in confidence among investors. The Bombay Stock Exchange's Sensitive Index, or Sensex, has surged 89 per cent from this year's low on March 9, outperforming the Bric countries that include Brazil, Russia and China.

Standard Chartered Bank's regional head of research, South-east Asia, Tai Hui agrees: 'The election results were helpful to reinforce investor confidence in terms of ensuring policy continuity and predictability.

'But this is perhaps in addition to the economic fundamentals that many investors are interested in.

Mr Hui added: 'The sizeable population and potential consumption are clearly attracting factors. But further to India's own attraction, the fact that multinational companies will need to rely on emerging markets for revenue growth is also pushing more investment to Asia, including India.'

'The US and Europe are expected to go through a multi-year structural consolidation in consumption and hence they will not be offering much growth in business.'

India's economy, like all other nations, was affected by the global slowdown but it was spared the worst due to robust domestic demand. Domestic consumption makes up almost 60 per cent of India's economy, compared with 35 per cent for export-focused China, according to a Reuters report.

This is another factor that makes India a seductive propostion to investors.

Dr Shreekant Gupta, associate professor at the Lee Kuan Yew School of Public Policy, says that while economies around the globe wilt and shrink with some recording double-digit negative growth, the Indian juggernaut keeps rolling on.

'The re-elected Congress-led government has attacked infrastructure bottlenecks with renewed vigour and dynamic ministers are now in charge of key areas such as highways.

'Work is on at a frenetic pace to complete a gleaming new airport and the Metro at Delhi which will host the Commonwealth Games next year,' says the professor who has been a Fulbright Fellow at the Massachusetts Institute of Technology.

'Singapore's tourist spots are chock a block with Indian tourists and flights to and from India are full, where no one seems to have heard of the 'R' word...!?

So it looks like everything is pointing to a renewed India fever but there are a few glitches that the Indian government has to worry about.

One is the delayed progress of the monsoon which should cause some rise in food prices. The RBI survey expects the Wholesale Price Index to climb to 5.9 per cent in the first quarter of 2010-11.

The other is speedy implementation of the new government's initiatives.

Steel czar Laxmi Mittal recently told The Times Of India: 'I can see that a lot of foreign investors are very interested in investing in India. They see the market, the population; they see the people.

'There is an interest. What we need is speedy execution. People should not get stuck in approvals and bureaucracy. It is a great reform if we can implement all the initiatives.'

I don't think there are many who would disagree with him.