Need ideas not committees.

Having made a complete mess of the economy the Congress led government has latched onto just one solution - reduction of interest rates. This is a craven and shameful attempt by the politicians to blame the RBI for the stinking mess that they have produced. The Governor of the RBI, D Subbarao is not buying this argument. In his testimony to the Finance Committee of the Parliament he said," The government's statement before the committee saying that the growth moderation has been because of RBI's monetary tightening implying it is entirely because of RBI's monetary tightening...I do not agree with that." The RBI is right to be concerned about inflation. The WPI for July was 6.7% so the CPI is near 10%. Inflation rate in the US in July was 1.4% while in the Euro area it was 2.4%. Historically the average rate of inflation in the Euro area was 2.3% from 1991-2012. The average inflation for the US from 1914-2012 was 3.4%. We should not forget that World War I started in 1914, the great Depression started in 1929 and World War II started in 1939. So there must have been extreme stresses during these periods but still the administration in the US managed to keep inflation rates down to manageable levels. In India the average rate of inflation from 1969-2012 has been 8.0%. Is it any wonder that India remains a poor country with hundreds of millions struggling to survive on less than one dollar a day? So why is the Congress, which is always beating its collective breast for the aam aadmi, so focused on growth while ignoring inflation which kills the poor? Because without growth there will be no foreign investment which means no dollars leading to increasing Current Account Deficit, falling rupee and a cut in credit rating to junk status. Not something you can brag about before the general elections in 2014. Also falling growth means lower tax collections which means less money to bribe the naked and hungry aam aadmi who are dying due to inflation created by the Congress. Private Equity investment was $1.2 billion in the first half of this year, which is less than 10% raised for emerging economies, compared to $2.45 billion last year. Investment by domestic companies has also dropped. " Envisaged total fixed investment by large firms in new projects, which were sanctioned financial assistance during FY12, dropped by a whopping 46% to about Rs 2.1 trillion from Rs 3.9 trillion a year ago," said a report by the RBI. That is not surprising because large firms are sitting on huge loans which they are unable to service. This means that banks have vast amounts of bad loans which they are hiding by restructuring them. The only way out is to reduce taxes by drastically reducing expenditure. This the criminal politicians are unwilling or unable to do. So what are they doing, apart from blaming the RBI that is? Our most revered Finance Minster has formed a committed to look into retroactive taxes and a tribunal to devise a roadmap. Wonderful. A Patiala peg all round.