Foreigners will invest only if taxes are lower.

A sigh of relief. S&P has revised India's outlook to stable from negative, although the credit rating still remains at BBB-, one notch above junk status. But after the ravages wrought by the Congress every forward step seems to be followed by one backwards. Retail inflation in August came in at 7.8%, down just a smidgen from 7.96% in July. Food inflation 9.42% in August from 9.36% in July. Farmers have become addicted to the previous government's policy of generating higher prices in food to give them higher profits, to get their votes. Any attempt at controlling inflation, either by increasing import of cheaper food from abroad or by curbing hoarding by speculators causes anger. While world food prices have fallen to a 4 year low, led by grain prices, prices in India continue to rise because of the built-in bribe to farmers. High food prices hurt the poor the most because they spend a higher portion of their income on food and need a much higher calorie intake to sustain physical labor. After rising by 3.94% in June the Index of Industrial Production increased by just 0.5% in July. The Prime Minister has placed great emphasis on manufacturing, which will stimulate growth by increasing employment, by inviting foreign companies to " make in India " but companies will only come here if taxes and inflation are lower. As per the Global Competitiveness Index India comes in at number 133 on inflation, 130 on tax and 131 on ease of starting a business. The figures are related. High taxes feed into inflation by raising prices and this results in the fall in the value of the rupee which, in turn, makes inflation worse by increasing the price of imports, especially oil. The mindset of politicians and civil servants is set in the concrete of socialism which loves high taxes to distribute handouts to the poor. High luxury tax on hotels in Delhi has cut occupancy and actually reduced tax collection. While Korea, Japan, Singapore, Taiwan and China, countries almost destroyed by war, have become rich India continues to pride itself as a developing country. Most people are disappointed that Mr Modi did not announce massive reforms as soon as he was sworn in. Some have written extremely offensive articles on his supposed lack of courage but there was little he could do. He cannot lower taxes without stopping all the handouts started by the Congress. If he does that the poor, who have become dependent on free money from NREGA and cheap food, will starve. Also, he needs to win the coming elections in states to get a majority in the Rajya Sabha to be able to pass reform legislation. Cutting corruption will save at least Rs 1 trillion and improving work ethic will speed up government work. Real reforms will come after that. It will take time.