Not really mistakes, just an itch.

Most experts recommend a fiscal stimulus to reverse the slowdown in economic growth, wrote VA Nageswaran. However, before recommending solutions we need to examine "The six big economic mistakes" the present government has made. The previous government had predicted a fiscal deficit of 4.5% for 2014-15 but actually it was 1.1-1.8% higher. On coming to power the government should have "put out a white paper on the economic mess it had inherited in various areas". To be fair, a brutally honest assessment of our economy might have resulted in a downgrade of our credit rating, which is just above junk status. Higher deficit means higher borrowing, which means higher government debt. Moody's warned that our debt is higher than those of our peers. Ratings assigned by Moody's has seemed quite illogical at times. Why care what foreign agencies do? L Chutel explains South Africa's experience after it was downgraded in April. A ratings downgrade would be followed by an increase in borrowing costs, a fall in stock market values and a fall in the exchange rate of the rupee. The government could not risk that. The government "did not take the emerging banking sector woes seriously enough". Raghuram Rajan, previous Governor of the Reserve Bank, forced banks to reveal their bad assets. Before that, banks were allowing companies to hide default by taking fresh loans to repay the old ones, a process known as 'ever-greening'. The government has passed a law to force companies to declare bankruptcy so that assets can be sold to compensate lenders. The first case under the new law yielded just 6 paisa to the rupee but at least a start has been made. As experience mounts banks will get more efficient in getting their money back. Our growth numbers are suspect because data collection is difficult and new laws, such as GST, will take time to settle down, wrote Profs Banerjee and Duflo. Therefore, one should not get too emotional about GDP growth rates. There is a bias against big business, both in manufacturing and in agriculture. As families have grown so landholdings have become smaller. The only solution is to provide jobs in manufacturing. Sadly, we import virtually everything we need so that there are few jobs to be had in manufacturing, wrote Prof D Gupta. Small and medium enterprises make up 99.7% of Japan's manufacturing and employ 70.2% of its workers. Small enterprises employ vast numbers of people because they make cheap products which our poor can afford. These enterprises should be helped to improve quality and productivity, wrote A Maira. Tax terrorism has to stop. Trouble is that growth is dependent on government spending and squeezing more taxes will give more money to spend. High taxes will reduce private consumption even more. People will hesitate to set up factories if rules keep changing. Politicians must stop interfering. But then, how will they show their power.