It is about position. Nothing else matters.

Private equity investment in India has dropped from $2.45 billion in the first half of 2011 to $1.22 billion in the first half of this year. Last year it was 11% of total investments in emerging markets while this year it is down to 7.1%. TOI, 18 August. Foreign Direct Investment is down 50%. Last year it was $12.2 billion between April and June while this year it is a mere $5.6 billion. Consumption is falling and companies are reluctant to make new investments in India preferring instead to make acquisitions abroad. The near 25% depreciation in the value of the rupee should have boosted exports by making our goods cheaper, a tactic so long used by China by pegging the renminbi to the dollar, but instead exports have fallen by near 15% in July. Between April and July exports have fallen by 5.06%. To be sure, some of it is due to decreased demand in the US and Europe but a lot of it is due to uncontrolled inflation which has increased prices by near 100% in the last 3 years. Rating agencies have put India on a negative watch meaning that our credit rating could be reduced to junk status in the next 6-18 months. But already markets have factored in a downgrade and are treating India as junk for investment purposes. In Credit Default Swap markets India is seen as a bigger risk than emerging economies such as Vietnam and twice the risk of other BRICS nations, Brazil, Russia, China and South Africa. The CDS rating for The State Bank of India, which is seen as a proxy for sovereign rating, was already 300 basis points higher before S$P warning and is now at 320 basis points higher. At this level it is seen as a higher risk than Philippines and Vietnam and twice the risk of Indonesia. What we need is for property prices to come down by about 70%, which will reduce the amount of black money in the system, bring down inflation to between 2-3% by keeping interest rates high and reduce taxes. This will immediately increase household consumption, reduce inventories and allow companies to make new investments. There is a hysterical demand for reducing interest rates because every company has invested heavily in acquiring land hoping to make windfall profits by building apartments and selling them at exorbitant rates. Now most builders are sitting on large numbers of unsold properties and hence are howling for interest rate reduction. They are not bothered that by doing so will further reduce the value of the rupee and stoke inflation. So what is the government doing? All officials and politicians are engaged in a nitpicking debate about growth rate. While Crisil and Moody's say growth will be 5.5% the sarkari idiots argue it will be 6.7%. Why? Michael Steiner, the new German Ambassador to India says," It is not about keeping your position. Leadership is about bringing people to somewhere and not yourself to somewhere." Sadly, for these scoundrels that is all that matters.