We know how to spend our own money.

The Prime Minister has advised people to have trust in banks. Mr Modi said that people should not buy gold but keep their money in banks, which is good advice because buying chunks of gold and storing them in bank lockers is the most nonproductive use of money. Since gold has to be imported it means transfer of our money to other countries. Keeping money in banks earns interest for the account holder and banks lend money to individuals, to buy properties or cars, or to companies to invest in new projects. In each case it creates new jobs and stimulates economic growth. The problem, however, is not a deficit of trust in our banks as a visit to any branch of the State Bank of India will prove, where you will see hundreds of people waiting patiently to transact their business. When Global Trust Bank, a private bank, failed the Reserve Bank encouraged the Oriental Bank of Commerce to take it over while the Punjab National Bank took over customers of Nedungadi Bank, so that depositors did not lose a paisa. Since then stringent supervision by the RBI has prevented a repeat of bank failures. So people know that their money is safe in Indian banks. It is the government they do not trust and blame for all their ills. They do not understand monetary policy, fiscal or current account deficits or the distorting effect of quantitative easing in the US and Japan but they blame the government for double digit inflation, which burns a hole in their wallets. The Congress never understood that and paid a heavy price. The Congress blamed external factors for the inflation and was baffled by the ingratitude of the voters despite the trillions of rupees given away in handouts. True, the Congress was not responsible for the subprime crisis in the US or the sudden jump in the price of oil to over $140 a barrel in 2008 but the very handouts that the Congress used to bribe voters boomeranged by creating inflation. The Congress compounded the problem by pressurising the RBI to keep interest rates low in the mistaken belief that everything would be alright if they could increase the growth rate somehow. High inflation reduced demand, forcing companies to reduce investment in new projects and people resorted to buying gold because their savings were being eroded by negative real interest rates. Politicians must get rid of the colonial mindset where all assets belonged to the crown and we had to pay for them. Telecom spectrum and mines belong to the people and raising money by auctioning resources increase costs for us. Same with airports where private companies will increase charges making flying more expensive and reduce the number of passengers. We realise that the government needs money to function but it is our money and we know how best to spend it.