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Mukherjee prepares to sell India story in Washington

With the India story losing some luster lately, tough task ahead for the finance minister.

By Asif Ismail

WASHINGTON, DC: In a few days, finance minister Pranab Mukherjee will arrive in the US capital on a trip that is being billed as a major effort to reassure foreign investors about India's continued medium- and long-term viability as an investment destination.

It is not going to be an easy task, with the India story having lost some of the lustre lately, and a dip in growth rate, the growth of 7.8% in first quarter this year was the lowest in five quarters. From an international investor's perspective, despite relatively strong fundamentals, there's a long list of worrisome issues.

That includes an inflation that continues to linger. The immediate reaction of the private sector to RBI decision to increase interest rates has not been positive. The unending saga of high-profile corruption cases, which have dented the image of the government of Prime Minister Manmohan Singh , is another one.

Lower returns, compared with China and some other Asian markets, has also been forcing investors to look elsewhere. "China has had huge returns, India hasn't had," says Kanwal Rekhi, co-founder of Inventus Capital Partners and a veteran of many US-India ventures. Other pet peeves among investors and fund managers are the slow pace of reforms and regulatory and infrastructure obstacles.