The correct response, therefore, should have been to foster a domestic business of customisation which could try to compete against overseas providers in serving global needs. Instead, the heavy-handed response of over-regulating PNs has been preferred. Similarly, attempts at banning hedge funds display ignorance. Hedge funds are welcome in all globalised financial markets. All mature markets are able to handle customisation and hedge funds, and still deliver a well-regulated securities market. It is only in India that the government is hyper-sensitive about customisation and hedge funds. India needs to figure out the direction it is headed in. The steps taken and the statements made on PNs seem to suggest that the ambition to make India a high-growth, modern economy with a modern financial sector is an empty one.

To the international observer, this also conveys the naivete and inexperience of the policymaking establishment. Key government figures have always put their faith in economic reforms, but the government now appears to be out of touch with the modern economic policy thinking that is needed for a country with a fast-globalising, one-trillion-dollar economy.