Foundation of the economy is hollow.

In an article in the Economic Times 2 IMF pundits predict that growth will be 4.7% in 2013-14 and 5.5% next year. After some politically correct preamble they write," But inflation remains high, growth has yet to decisively turn around, CAD continues to be financed by volatile external flows, and the quality of fiscal consolidation remains a concern. In addition, subdued economic growth has led to rising corporate and financial strains." And again," However, even in the presence of slowing growth, Indian inflation has remained persistent and high, eroding households' financial savings and undermining currency stability. We believe low and stable inflation is the best way for monetary policy to support robust inclusive growth." What they mean is that the key to economic growth is low inflation and interest rates must remain high for as long as it takes to control inflation. Lower growth reduces demand and so should brings down prices but this is not happening in India. Lower demand leads to lower profits for companies, who find it difficult to service their loans, causing rising bad loans for banks. Inflation has become intractable because our most revered Finance Minister would not allow the RBI to increase interest rates saying," If the government has to walk alone.... then we will." Like some corny Bollywood dialogue. Now that the IMF has supported what we have been writing for the last few years the FM is incensed. He defended his record in parliament, bragging about controlling the fiscal deficit but forgetting to mention that this is being done by robbing cash from Public Sector Units in the form of excessive dividend, bringing down their share prices, and postponing payment for subsidies that he introduced to the next government. " I appeal to all political parties to join me in the pledge that we shall not, we shall never, do anything that will affect stability of the foundations of the Indian economy," he said. Lofty rhetoric but can we believe him? Despite his boast that the fiscal deficit would be 4.6% of GDP it seems that the deficit has already crossed the initial target of 4.8% by January. And what is going to do now? The cabinet passed proposals to increase Dearness Allowance to 100% of basic salary and increased minimum pension to Rs 1000 per month. The Congress is piling on expenses so that the new government is inundated and cannot function. This is how they want to keep our foundations stable. Great patriots, aren't they?