We need businesses, not beggars.

The credit rating agency, Fitch warned that after the mauling in the recent elections in 4 states the Congress would be inclined to increase spending on social schemes which would vastly increase the Current Account Deficit. The government is committed to limiting the fiscal deficit to 4.8% of the GDP but had used up 84% of the deficit by 14 October. At the same time tax receipts are not rising as predicted in the budget, leaving a big hole to be filled. That is because growth is stuttering along at below 5% level. Uncontrolled inflation and indiscriminate increase in taxes on all goods and services have reduced demand which is showing in reduced sales and thus reducing taxes. There are only 2 ways the fiscal deficit can be reduced : either by increasing tax collections or by reducing expenditure. Tax collections increase naturally when the economy is growing with a low inflation, encouraging people to spend more. Trying to increase taxes by increasing rates and levying taxes on all services just add to inflation and further reduce demand. Demanding more taxes from earnings of foreign companies or suddenly changing rules regarding transfer payments discourages Foreign Direct Investment which India needs desperately. Reducing expenditure is equally tricky. The Congress relies on unproductive handouts to its ' vote bank ' to win elections and there will be extreme resistance to any attempt at reducing bribery on taxpayer money. Thus, expenditure on vital infrastructure and reforms are being cut, hurting growth prospects in the long term. But surely our most revered Finance Minister keeps boasting about 9% growth rates a few years back so he can work his magic once again. Er, no. That growth was a combination of reforms under the previous BJP government, very low interest rates in the west, allowing our companies to borrow at very low rates, and a construction boom, due to low borrowing costs, leading to a massive property price bubble based on black money generated by numerous scams. That the economy is growing at less than 5% even though interest rates are close to zero in the US and Europe shows how the Congress has destroyed it. Exorbitant land prices have increased expectations so that it is virtually impossible to find land for building factories. We need to move away from wasting taxpayer money on handouts to encouraging wealth creation. First we have to get rid of politicians. Is that possible?