Should we just forget our doubts?

Two days back, the Chief Economic Adviser, Arvind Subramanian presented this year's Economic Survey to parliament, as a prelude to the annual Budget which will be unveiled tomorrow. It is very encouraging. Growth rate this year will be 6.75%, rising to 7-75% next year. Industry growth was at 4.4% while farm growth was 2.1%. Rural demand is recovering. Exports grew 13.5% in the third quarter. Services exports and private remittances are rebounding. Non-food credit growth was 4% in November. The Survey also said that India has no export superstars. The top 1% of firms in Brazil, Germany, Mexico and the US account for 72%, 68%, 67% and 55% of exports respectively, while in India it is only 38%. The top 5% of companies accounted for 91%, 86%, 91% and 74% of all exports while in India it was only 59%. Average inflation dipped to 3.3% in 2017-18. True but retail inflation surged to 5.21% in December. The price of oil could pose a problem by adding to inflation. Curiously, economic growth was accelerating in India from 2014 to 2016, while the rest of the world was slowing down but after that India started to slow while global growth accelerated. This has been blamed on high policy rates in India in comparison to other countries, indirectly blaming the Reserve Bank. The RBI has been set a target rate of 4% in retail inflation, plus/minus 2%, giving it a range of 2-6%. The RBI will surely try to target the ideal of 4% set by the government and set policy rates accordingly. In fact, the policy rate has been reduced from a high of 8% in January 2014 to 6% in August 2017. It is disingenuous to compare us with the US which has a much lower inflation target of 2% but has been struggling to achieve this despite reducing interest rate to almost zero and its bond buying program. The Survey celebrated a 50% increase in businesses registering under the Goods and Services Tax, or GST, which will increase government revenues. While GST will probably be good for business in the long term, by eliminating multiple taxes, increasing taxes in the short term will result in increasing consumer prices. If that happens the RBI will have no choice but to tighten monetary policy. Only 28% of urban dwellers live in rented housing, down from 54% in 1961. This is because 500,000 dwellings are lying vacant in Mumbai and 300,000 in Delhi. Why? Because Rent Control laws are so hostile to landlords. Delhi High Court did not allow rent to be increased from a paltry Rs 150 per month, despite enormous rise in property prices. This hampers migration in search of better jobs and increases costs for students, studying in colleges. Current account deficit will be 1.5-2% which means we will be spending $40 billion more on imports than we earn from exports. What is this growth where you lose money? So, everything is fantastic, but who will explain our doubts.