He is lucky but does he have courage?

The new Governor of the Reserve Bank, Raghuram Rajan is a very lucky man although he may not agree seeing the rout on the Sensex, the steep dive of the rupee and the threat of a credit downgrade to junk status. Wherever you look the news is grim. Inflation continues to increase without control and the impending rise in oil prices, due to the threat of missile strikes on Syria and the fall of the rupee against the dollar, may take it to record levels. GDP growth fell to 4.4% in the first quarter of the current financial year, bond yields are rising to 10% and the Purchasing Managers Index for manufacturing fell to 48.5% in August compared to 50.1% in July, the lowest level in 4 years and the first sub-50 level since March 2009. So, amid all this doom and gloom how can Mr Rajan possibly be a lucky man? The reason is that for the first time property prices are beginning to come down. Commercial real estate prices are at their lowest level in 7 years. Livemint, 3 September. According to an index by Cushman and Wakefield, a property consultant the index is down to 278 after reaching highs of around 450. Residential property prices are not down to the same extent. That is because builders collect 40% of the price upfront and build with that money so they are not under the same pressure to sell. Even so the National Housing Bank's residential housing index, the Residex shows a fall in prices in 22 out of 26 cities, that it tracks, in the first quarter. ET, 2 September. Hyderabad is down by 4.56%, Kolkata is down by 4.06%, Chennai by 2.26%, the National Capital Region by 1.49%, Bangalore by 0.92%, Pune by 0.90% and Mumbai by 0.45%. Not much but the trend is encouraging. The reason why this news is excellent for India is because it was the humongous property price bubble generating black money which is responsible for all our troubles. Since every man and his uncle is dishing out free advice to Mr Rajan on how to manage the economy we should add our 2 paisa's worth. Mr Rajan should allow the rupee to find its level. Keep the interest rate at 7.25%. The inflation will peak and then start to come down because of low demand. He should bring inflation down to 2% and keep it their by keeping interest rates 100-200 points above that level and not allow property prices to increase more than 2% per year. That will encourage savings, reduce the demand for gold, strangle black money and generate genuine growth. The politicians will howl but he should tell them to get lost. Question is does he have the courage?