Beware what you wish for, it may come true.

The government has been desperately hoping for a fall in foreign exchange drain due to gold imports. Its prayers have been answered. Gold prices have fallen more than 20% from $1750 an ounce to $1360 which means that there will be less pressure on our import bill, perhaps decreasing our Current Account Deficit. The relief in the government is palpable but, sadly, as always, there is a sting in the tale. Several stings perhaps. The fall in the value of gold means that the value of our gold reserves have also fallen. The Reserve bank holds 557.75 tonnes of gold which was valued at $34.08 billion in September 2011 but has now dropped to $24.17 billion. This means our foreign exchange reserves have also dropped from $293 billion to $283 billion. Which also means that we must bring down our CAD, either by increasing exports or by increasing Foreign Direct Investments. Our exports fell by 1.76% in the last financial year to $300.6 billion which increased the trade deficit to $190.91. The government has decided to extend the Export Promotion Capital Goods Scheme, which allows exporters to import capital goods without tax, beyond 31 March and has extended it to all sectors. They have also decided to decrease the minimum area required for a Special Economic Zone to half of what is required at present because it is very difficult to acquire land for such zones. The reason that foreign investors are sceptical is because the government keeps changing rules all the time rather like a monkey climbing a greased pole. When we have 5 year plans devised by the Planning Commission, presided over by the great sage, Mr Montek Singh Ahluwalia, why can we not have stable tax and commercial rules that just roll over from year to year so that everyone knows exactly what to expect. Trouble is that the Congress multiplied wasteful expenditure by many times, first to win the elections in 2009 by starting the NREGA scheme, which pays the rural poor for doing nothing, increasing civil service salaries by 80% and by forgiving all loans to farmers, and then to cling on to power by bribing various political gangs by inventing 53 ministries, all working at cross purposes and looting the exchequer, as the multitude of scams have shown. The US, a $15 trillion economy, has just 15 Secretaries, equivalent to our cabinet ministers, and another 7 of cabinet rank, making 22 in all. Having increased expenditure, which increased the fiscal deficit to over 5%, leading to a danger of a credit downgrade, the Congress is desperate to increase revenues, which means punishing taxes on every service that they can imagine. This has led to double digit inflation, reducing consumer spending and reducing growth. Falling commodity prices means that the global economy is slowing down which will decrease exports. To decrease unemployment the US is tightening H1B visas which will hit our greatest exports in IT. The nation should be above self interest. Not for this lot.