A Faustian bargain, but who pays?

After rising by 9.8% in October Industrial Production fell by 3.2% in November while retail inflation inched up to 5.61% in December from 5.41% in the previous month. Consumer durables, such as cars and electronic items, grew by 12.5% but non-durables, such as food and items of daily use, contracted by 4.7%. Apparently rural demand is down after 2 years of poor monsoons. If so, why is rural inflation higher at 6.32%, compared to an urban inflation rate of 4.73%? Mystery. Of course, figures do not tell the whole truth. Life style inflation is much higher because of soaring taxes. Politicians win elections by promising handouts and then increase taxes to pay for them. Delhi government is ecstatic at higher collections, having doubled taxes on hotels and cinemas from 20% to 40%. Why? Because they have increased salaries of MLAs by 400%. So, we pay extortion money so that they can travel abroad, attend marriage parties and buy gifts. Isn't that what the mafia does? Chief Minister of Bihar, Nitish Kumar has imposed 13.5% tax on luxury items, including samosas, kachauris, mosquito repellent and hair oil. Apart from the fact that we should have the individual freedom to eat out or use whatever cosmetics we like these items are mainly used by the poor. Why is Nitish Kumar punishing the poor? Because in his uncontrollable desire to be chief minister he made a large number of rash promises which have to be paid for. He has also boxed himself in by promising to ban the sale of alcohol, which means he loses Rs 40 billion in excise revenue. The people of Bihar suffer but goonda raj will make windfall profits from smuggling liquor. An election victory is for 5 years. By 2017 rises in salaries under Seventh Pay Commission and the restructuring of electricity boards, under the Ujwal Discom Assurance Yojana, will kick in, putting further stress on expenditure. The global economy is uncertain and no one can predict at what rate it will grow. Recent growth was fueled by $200 trillion of debt, which is unsustainable. In such a volatile situation India's growth prospects look limited and the incessant rise in taxes will strangle any prospect of growth by reducing consumer spending. What we can look forward to is more people with PhD degrees applying for jobs as peons. Politicians will continue to enjoy.