"This is a volatile place," says Frank Hancock, Managing Director, Corporate Finance, Barclays India. A Briton who came to India after stints in West Asia, Eastern Europe and Africa, he has lived in Delhi and Mumbai for the last 18 years. So volatile has his stint been that he once considered leaving for good, when the economic slowdown at the turn of the millennium, along with the Kargil war, almost brought business to a standstill. "In hindsight, I'm lucky I stayed back," he says. Having lived through past slowdowns here, he is not particularly worried about the present one.

A host of expatriates have made India their home since economic liberalisation began in 1991. Some have come as heads of multinational corporations, others at lower levels in these companies, still others as entrepreneurs. Many Indians, who had either grown up or lived for years overseas have also returned, keen to play a part in the India growth story. How do they feel about doing business in India now? With growth having slipped, inflation running high and the rupee depreciating sharply, do they share the current gloom that has gripped many locals? Or do they think this is just a temporary phase?

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Opinion is sharply divided. Andrew Holland, CEO, Investment Advisory, Ambit Capital, a financial services company, who also hails from Britain, agrees with Hancock that current fears are overdone. "This too shall pass. The situation is not as bad as being made out." But there are others who take a very different view. Ruchir Sharma, Head of Emerging Markets at Morgan Stanley, for instance, whose book Breakout Nations: In Search of the Next Economic Miracle has been making global waves, gives India only a 50 per cent chance of success. Sharma had his early education in India, but has since been based in the US for many years. "India is already showing some of the warning signs of failed growth stories, including early-onset overconfidence," he writes. "(There are) a whole series of risks that the Indian and foreign elites leave out of the picture, including bloated government, crony capitalism, falling turnover among the rich and powerful, and a disturbing tendency of farmers to stay on the farm." In keeping with Sharma's sceptical view, Morgan Stanley has estimated India's gross domestic product (GDP) growth in 2012/13 at 5.8 per cent against the Reserve Bank of India's estimate of 7.3 per cent and the finance ministry's 7.6 per cent for the same year.

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Many expatriates believe India could have avoided the current crisis had it pushed further economic reforms early. These include modifying laws to make land acquisition easier, and allowing a larger volume of foreign direct investment in certain vital sectors. "The absence of any reforms does have its effect on proprietor confidence, since people launch projects with the next five to 10 years in mind," says Ajay Srinivasan, CEO, Aditya Birla Financial Services, who worked overseas for many years before returning to India in 2007.

Even a sympathetic observer like Holland of Ambit Capital expresses his unhappiness. "The last time we heard of reforms was when the National Democratic Alliance (NDA) government was in power from 1998 to 2004," he says. Srinivasan even attributes the golden run from 2003 to 2007 - when the country saw an investment boom and had three consecutive years of GDP growth above nine per cent - to decisions taken during NDA rule. "They include policy steps towards de-regulating telecom, increasing power generation and so on," he says.

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Blame Game
How justified is the government's excuse that the current economic woes are largely a fallout of the situation in Greece and the Eurozone? "No country is entirely insulated from the crisis in Greece, but India is still relatively sheltered," says Georg Stratenwerth, Managing Director, Advent International Global Private Equity, who hails from Germany. He should know, having worked in the US, Britain, and Thailand, before he came to India three years ago. So too, Srinivasan feels India itself is largely to blame. "Our current situation is mostly the result of bad economic management from 2008," he says.

Expats' worries are not all that different from those of Indians in business: they, too, rue the lack of attention to infrastructure, the growing corruption, the rising fiscal and current account deficits, the persistently high inflation. "The cost of doing business in India is becoming very high," says entrepreneur Esther Lennaerts, a Dutch national. In 2007, she set up Pressto, a drycleaning service in Mumbai and Delhi for premium brands, in partnership with Radha Kapoor, YES Bank founder Rana Kapoor's daughter. "But for labour, everything is expensive," she says.

Sylvain Bilaine, also French, former Managing Director of Renault India, who now runs an Indiafocused consulting firm, SYB Consulting, spells out details. "It is a nightmare to borrow money here, with interest rates at 12.5 to 15 per cent," he says. "Unless interest rates are lowered, the index of industrial production will remain flat." India's IIP grew just 0.1 per cent in April, compared to a year ago. Vikram Gandhi, who spent nearly two decades overseas working with Morgan Stanley and Credit Suisse, but now runs an advisory firm in Delhi, is even more pessimistic. "Foreign investors have other alternatives in the global marketplace," he says.

But is there a genuine likelihood of slipping back to the bad old days of 1991, when a sharp dip in forex reserves raised fears of India defaulting on its international loans? Most of those spoken to dismiss such a fear as exaggerated, noting that the Indian economy is now far more robust and diversified than in 1991.

"Forex reserves as a ratio of imports are significantly higher now than in 1991," says Srinivasan. But that is no reason for complacency. "What concerns us about India's balance of payments at the moment is the size of the oil import bill, coupled with greater reliance on shortterm flows," says Barclays' Hancock. A few weeks ago, when he went sailing off the South Mumbai coast, Stratenwerth spotted a pod of dolphins. "We had heard that dolphins had disappeared from these waters," he says. "But they were back. Perhaps they just lost their way, but have now found it?" He hopes that India, which also seems to have lost its way, will find it soon as well.