A few years ago the Economist asked "Is India overheating?" It wasn't. Now business leaders, investors and journalists are asking "Is the Indian economy about to go in the tank?" I doubt it.
So is it time to double down? The short answer is no. Though the Sensex is way down from recent highs and prone to seesawing back and forth, trying to hit the sweet spot is called "market timing" and it can be pretty disastrous -- all you need to do is take a look at my IRA since the last time I bought big (right before the US economy imploded).
Nevertheless, my prediction is that India will not implode next year, despite dire predictions of sub-6 percent economic growth. Though almost every major economic indicator is down -- industrial output most significantly, perhaps -- food inflation has finally started to drop and we're hearing noises about the central bank cutting rates for the first time since steady hikes began in March 2010.
The government will probably remain paralysed for awhile yet, yes. But that's starting to look like business as usual rather than the onset of some radical upheaval now that Anna Hazare's anti-corruption movement appears to be fizzling. And I think if you looked at the end of the year numbers for the Indian market going back awhile, you'd see the same trend of selloffs by foreign institutional investors.
One small disclaimer: I'm no economist. I've never even played one on TV.