Rules do not apply, because we are special.

India has its own economic laws which are unique to itself, writes a consultant, A Nageswaran. There is only one rule, which is to reduce interest rate, and the only duty of the new governor for the Reserve Bank, who will be appointed shortly, is to work out when and by how much to reduce rates. The common wisdom is that high inflation is due to food prices which are due to supply constraints and will not respond to monetary policy. Interest rate must be kept low to help the government to reduce its fiscal deficit because the government borrows from the market to finance its spending, Rs 6 trillion this financial year, but government debt does not matter because it is borrowing from citizens. In fact, high inflation brings down the debt to GDP ratio by eroding the value of the debt. The ratio of debt to GDP fell from 77.1% in 2006 to 66.4% in 2014, because retail inflation was in double digits, despite the Congress running a high fiscal deficit. Low interest rates will increase investments and increase supplies. Property prices must keep on rising infinitely so interest rates must be kept low at all times. India can sustain high inflation, low interest rate and a high growth rate, without any effect on the value of the rupee, because we are unique. Fall in savings rate do not matter because foreign investors will keep pouring money into our market and we will continue to be the world's fastest growing economy without any problem. Because we are special. To this list we would add that, like real estate, the government must ensure that share prices keep on rising, regardless of profits or earnings per share. Exports do not matter because India is a vast market in itself, completely ignoring the fact that Indians want to buy international brands. Thus, we end up importing almost everything we use while our exports have been falling for 18 months running. Exports are necessary to improve quality, encourage innovations and improve productivity. India is the fastest growing nation and a middle income country but it is a poor country which justifies endless amounts of handouts to the poor. This apparently increases the spending power of the poor, leading to a rise in demand and leading to higher growth. This has created a class of people totally dependent on government largesse, who produce more children to get more subsidies. Gandhi used to go around in a loin cloth so taxes must be very high on goods deemed to be luxuries, which make them too expensive for the poor. Such rules do not apply to politicians and civil servants who may visit Rio Olympics on taxpayer money. India will continue to grow while ignoring every basic rule of economics. After all we are the country of the great Indian rope trick, aren't we?