Which will roar first? That is the question.

Since the overwhelming election victory of Prime Minister Narendra Modi experts have been proffering advice on what he should do to stop the economy falling off a cliff. "Fixing the economy needs policies for the short term (fiscal 2019-20) and reforms for the longer term," wrote R Jagannathan, a supporter of Modi. Economic growth may have fallen to 6% in the last  quarter of the last financial year ending on 31 March, said a report from the State Bank of India (SBI). This is important because, "About 84 million young people became eligible to vote in a general elections for the first time since 2014 polls," wrote Prof S Rajagopalan. "They are entering the workforce full of hope, looking for strong leadership to fulfil their aspirations."  The first thing to do is to recapitalize the banks. On 31 December 2018, public sector banks (PSBs) had Rs 8.64 trillion in bad loans on their books, which are loans in which default has been longer than 90 days, wrote V Kaul. The only painless way to recapitalize PSBs is to link it to Reserve Bank of India's (RBI) excess capital, said Jagannathan. The RBI earns a lot of money from seigniorage, from which it pays a dividend to the government.  "We do not pay interest on our liabilities," said former governor of the RBI Prof R Rajan. "However, the financial assets we hold, typically domestic and foreign government bonds, do pay interest." If the RBI prints notes, as it is empowered to do, it can lose control of inflation, "exemplified by Venezuela in the 1980s and 1990s," wrote A Mukherjee. "The trouble is that the central bank can't reduce one side of the balance sheet without a concomitant decrease in the other." So, if it pays a higher dividend to the government it will have to sell an equivalent amount of its assets, creating a "cataclysmic deflationary shock for the economy". The goods and services tax (GST) should be simplified and, "A third focus area should be to restore infrastructure spending." To win, Modi promised Rs 100 trillion of capital investment in infrastructure by 2024, "along with tax cuts for middle class Indians", wrote Beniwal and Mazumdar. Rs 30 trillion will be spent on railways, highways and in linking rivers in India, which is intended to provide cheaper transport as well as water for irrigation in dry regions of the country. Trouble is "the government spending more means the government is borrowing more to finance the higher fiscal deficit" which will push up interest rates, said Kaul. No problem, wrote Jagannathan, the RBI should cut interest rates by a huge 75 basis points. By next year, "demand should be roaring ahead" so revenues will rise and the government will need to borrow less. Modi earned Rs 11 trillion in 4.5 years because of very low prices of crude oil since the end of 2014. The price of oil has doubled and there is a danger of roaring inflation which will suppress demand. Who knows what will roar?