Control inflation and decrease taxes. It's easy.

Industrial production fell 2.2% in June and is down 1.1% in the April to June quarter. The index was down 2.8% in May and not 1.6% as was reported earlier. Livemint, 13 August. Compared to July of last year car sales are down 7%, commercial vehicles sales are down 15%, 3 wheelers sales are down 6%, motorcycles sales are down 2% and utility vehicles sales are down 17.53%. Car sales have fallen 9 months in a row. Utility vehicles was the only segment which was growing on the back of lower price of diesel as compared to petrol, higher disposable income and higher farm output but sales are falling because diesel price is being raised every month to bring it into parity with petrol. Taxes on UVs were raised from 27% to 30% in the last budget on vehicles with engine capacity exceeding 1,500 cc, length exceeding 4000 mm and having a ground clearance of 170 mm or more. The Consumer Price Index fell from 9.87% in June to 9.64% in July but is still very high. The Wholesale Price Index has increased to 5.79% in July from 4.86% in June. The rupee is still below 60 to the dollar and will fall further because of uncontrolled inflation which will increase the rate of inflation even more. So what is the answer of the government to a collapsing economy? The customs duty on gold has been increased from 8 to 10%, on platinum from 8 to 10% and on silver from 6 to 10%. This is to discourage people from buying gold ornaments which will hopefully reduce the Current Account Deficit and raise Rs 48.30 billion in extra revenues. They are also deciding on increasing taxes on imports of " non-essential "  goods. Seems that this Congress government has just one response to every economic problem and that is to raise taxes. They seem incapable of understanding that high taxes add to prices and depress consumer demand. If demand is low companies will cut production, instead of adding to capacity, fewer jobs will be created and demand will fall further. The Congress is absolutely determined not to take the one step that will solve all our problems and that is to increase interest rates, not by insignificant amounts but by 500 basis point to 12%. This will bring down inflation and encourage people to save more in banks instead of buying gold and thus bring down the CAD. Banks will have more money to lend and companies will start to invest once demand picks up. Why are they so against doing the right thing? Mystery.