The Indian fiscal cliff.

Car sales fell again in March as they have been doing in the last year. Hyundai Motor sales declined 13.86% from 39,122 to 33,858, Tata Motors fell 66.62% from 36,984 to 12,347, General Motors fell 14.94% from 10,588 to 9006, Honda Cars fell 8.82% from 11,016 to 10,044 and Ford India fell 41.61% from 9,028 to 5,271. TOI, 2 April. Renault India jumped 8 fold from 1,005 to 8,232. These are such pathetic numbers that it is a wonder that these foreign companies still see fit to waste their time in India. High taxes and scorching inflation have left little money in people's pockets while sky high salaries at car companies mean that they have to keep raising prices, which will reduce sales still further. In some companies workers are earning between Rs 50-100,000 per month, astonishing salaries equivalent to mid level managers in banks and other businesses. Production in 8 core sector industries fell 2.5% in February, the first time in the last financial year. Natural gas fell 20%, Coal 8%, Electricity generation 4.1% and Crude Oil by 4%. Without energy our manufacturing cannot grow and without that our deficits will continue to grow as we import more from abroad. Taxes do not just rob money from the people, which they do, but they rob people of something even more valuable, which is time. To pay any tax you have to apply for a PAN or Permanent Account Number. To pay sales tax or VAT you need a TIN or Tax Identification Number, to pay Service Tax you need a Service Tax Number and to pay any tax deducted at source you need a TAN or Tax Account Deduction Number. To get these numbers you have to find the right government offices, face huge amounts of time wasting and rude behavior. But you cannot pay taxes unless you prove who you are by providing photographs and address proofs to prove that you are not a terrorist while Musharraf, who was responsible for the Kargil attack, was an honored guest in India in November. So naturally you will take advice from a tax consultant. Not so simple. There is Service Tax on tax consultation which will be passed on to you so you end up paying tax to pay tax. Is it any wonder that foreign companies are reluctant to do business here? Domestic air traffic fell by 3.57% in the first 2 months of this year, from 10.395 million last year to 10.023 million this year. The reason given is that number of flights declined because Kingfisher failed. Lies. Why has Spice Jet reduced ticket prices to attract passengers if its flights are full? The only remedy is to increase interest rates to control inflation while cutting taxes to stimulate demand. Sadly our most revered Finance Minister said yesterday," But government is always pro growth and government will always argue for lower interest rates." Desperate to somehow prevent a collapse of the economy before general elections. After that, the country may fall off the cliff. Into an abyss. Who cares?