In a provocative cover story on the world's hottest economy (arguably), India Today magazine makes a convincing case that the Indian market may just be running out of steam.

Not only has incoming investment tanked over the past year, the magazine says, but local giants like Reliance and Tata are now looking to foreign shores for expansion.

The diffidence of investors in the Indian story is corroborated by a cursory look at the numbers for fresh investment in the last 12 months, the magazine said. According to data compiled by Projects Today, a sum of Rs 1,97,000 crore ($44 billion) of fresh investments was committed to the Indian economy in the period between April and June 2010. A year later, between April and June 2011, that number had fallen by 70 per cent to just Rs 57,000 crore ($12 billion). Says Saugata Bhattacharya, chief economist and senior vice-president, Axis Bank, "There is no doubt that a slowdown in investment has taken place."

Blaming Manmohan Singh's United Progressive Alliance government for the drop in incoming funds, the magazine cites the economy-minded prime minister's failure to pass a single reform-oriented policy since his re-election in 2009, as well as the corruption allegations that have soured the business climate following the 2G telecom scandal.

The government is in a state of paralysis, the magazine writes. It has been robbed of credibility by the revelations of successive scams. Its ham-handed attempts to nail the alleged perpetrators of the scams have led to perceptions of a witch-hunt. It has deterred ordinary bureaucrats and businessmen from making even routine decisions, all of which can be questioned by multiple government agencies-CBI, CVC, CAG, ED. The prospect of jail without bail is making corporates nervous. It isn't just scams. Crucial policy decisions are held to ransom by warring ministers unwilling to defer to prime ministerial authority. The prime minister seems unwilling to change this.

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Three of India's biggest business groups, the Tatas, Reliance-ADAG and Essar have been directly hit by the mess created by the Government in telecom. Instead of expanding their business in India-already under pressure from brutal local competition-they spend their time and resources dealing with investigations. The remaining players in a oncebooming sector are lying low or, like Bharti-Airtel, focusing their energies overseas. When Bharti-Airtel bought Zain's Africa operations, Mittal appointed his right-hand man in India Manoj Kohli as head of Africa operations in a clear signal of where his priorities lie. This is a remarkable turnaround and is symptomatic of the spluttering of India's growth story.