The combination of very high inflation, ever increasing taxes and high interest rates are beginning to take their toll. Manufacturing is contracting and the rupee is dropping against the dollar. This raises import costs and further worsens inflation. The fall of the rupee has frightened foreign investors into selling stocks because their returns, after conversion to dollar, decreases with the falling value of the rupee. According to RBI officials the government may need to borrow an extra Rs 1 trillion to meet its spending needs. This is not stopping criminal politicians from junkets abroad. Increasing taxes will just add to inflation and stop consumer spending which is dropping anyway. The State Bank of India, the largest bank in India, was downgraded by Moody's forcing an injection Rs 80 billion by a clueless, panicking finance ministry. Next month India's sovereign rating comes up for review terrifying the government. Any downgrade will raise borrowing costs for Indian companies cutting profit margins. In an effort to support the equity market finance officials are thinking of reducing Securities Transaction Tax and allowing individual foreigners to buy Indian shares. That would be dangerous. Indian companies indulge in false accounting, diversion of funds for personal use, insider trading, under and over invoicing, rampant bribery and other criminal acts. Foreign shareholders could file cases in foreign courts where trials will be speedy and sentences heavy. We could see most of our industrialists in foreign prisons. The economy is on quicksand. But, no worries. With the world's Most Famous Economist in charge we are safe. Are we?