If calamities are common?

Prof A Panagariya makes a spirited defence of economic management in the last 3 years during which Mr Modi has been the Prime Minister. In these 3 years GDP at market prices has grown by an average of 7.5%, compared to below 6% during Congress years. It is disingenuous to dismiss these figures by the Central Statistics Office as flawed but accept the latest figure of 5.7% growth as correct. Corporate savings averaged 11.8% of GDP between 2014 and 2016, compared to 7.4% from 2003 to 2912, while corporate investment was 12.95% of GDP from 2014 to 2016, compared to 12.4% from 2003 to 2012. If companies were saving and investing at a higher rate then they must have been making higher profits. Indeed, low commodity prices were contributing to a rise in profits of some sectors, although consumer demand was flat. However, if corporate investment was growing why did Gross Fixed Capital formation, which measures new asset formation through new investment, fall from 34.6% to 31.9% of GDP and, if companies are saving more, why has corporate debt grown to Rs 18 trillion. Total bad loans in banks are in excess of Rs 8 trillion, but could rise higher, which means that banks are unable to lend for new investment. Dismissing these as 'twin balance sheet problem' will not wash. Exports have fallen from $281 billion in 2012 to $229 billion 2016. The professor does not think that the economy needs a stimulus, just lower interest rate and everything will be alright. The government has already resorted to a fiscal stimulus, wrote V Kaul. Till the end of August the government has already spent 96.1% of the fiscal deficit budgeted for the whole financial year. Last year it had spent 76.4% over the same period. In absolute terms the government has spent Rs 5.25 trillion out of the budgeted Rs 5.47 trillion. Yet, it insists that it will meet a deficit target of 3.2% of GDP. How will it perform such a miracle? By extorting as much tax as it can out of hapless citizens. Taxes on fuel have become astronomical. VAT on petrol has risen from Rs 1.43 trillion to Rs 1.66 trillion, while excise duty collection has risen from Rs 1.79 trillion to Rs 2.43 trillion. States suck their share of our blood. The Goods and Services Tax was supposed to simplify indirect taxation and make it easier to pay. Instead it has turned into a nightmare with 8 different rates, large numbers of returns to file and delays in repaying input tax credit. So great is the panic that even BJP fellows, the prime minister's own party, are talking about an impending crash in the economy. Johann Norberg wrote that people "overestimate the likelihood of a calamity. This is because they rely not on data, but on how easy it is to recall an example. And bad things are more memorable." Sadly, 'bad things' are common in India.