You cannot square a circle.

There seems to be an expectant hush over economic news in India. Everyone, including politicians, share brokers and business tycoons are holding their collective breaths with fingers and toes crossed to see whether the new Governor of the Reserve Bank, Raghuram Rajan reduces interest rates when he takes over on 5 September. In the interim he will be working as Officer on Special Duty. The RBI has decided to sell Rs 220 billion worth of bonds every Monday to reduce liquidity and support the rupee which is around 61 to the dollar and in danger of sinking further. This shows that the RBI is determined not to raise interest rates which would control inflation, stimulate saving and support the rupee. But resorting to short term measures only sends the message that the RBI is not really serious about the economy and is working to support the Congress by reducing rates as soon as possible. Whether it can continue with its juggling without disaster remains to be seen. Apart from the Congress, reducing rates only helps the property market. According Magic Bricks PropIndex prices and supplies of properties in 11 cities have gone up. TOI, 10 August. In Mumbai builders are constructing apartments costing between Rs 150 million and Rs 1 billion, which is a little more than $16 million, at $300 a sq foot. Average price of a luxury apartment in Manhattan is $4.2 million. Builders are sure of selling off their stocks in 3-4 years. While the Chinese are complaining about prices with an inflation rate of just 2.7% year on year we are dying with inflation at 10%. Politicians could not care less. All they are interested in is to protect black money which will be needed to win the next elections, never mind if the country goes back to the stone age. To win they also need vast sums of money to bribe the " vote bank " but this will increase deficit and push the rupee down further. So an inter-ministerial panel has suggested higher taxes for import of non-essential goods, which they class as luxury items. This apparently will help to reduce the Current Account Deficit. The beauty of this scheme is that they will not be personally affected as they can take their families on shopping trips abroad on taxpayer money and return loaded with contraband without paying any duties as they are exempt from customs searches. It is impossible.