Are we permanently stuck in this trap?

Consumer inflation (CPI) came in at 3.18% in June, a tad higher than 3.05% in May, but industrial production (IIP) growth was 3.1% in May, compared to 4.3% in April. Inflation level is thus well within the Reserve Bank's (RBI's) target of 4%, set by the government. Food inflation was just 2.17% in June, while core inflation, which excludes volatile food and fuel prices, was steady at 4.54%. Wholesale prices (WPI) rose just 2.02% in June which is the lowest for 23 months. The RBI has cut interest rate three times already this year and changed its stance to accommodative which means it is sure to cut it again at its next meeting. That is of great joy to the government because it lowers its cost of borrowing, yields on the 10-year the benchmark bonds dropped to 6.33%, the lowest since December 2016. Even so, yields on Indian government bonds are much higher than in developed countries, where yields have turned negative on $13 trillion worth of government debt, which means investors are paying to buy these bonds. Normally, businessmen in India are happy with low inflation because, that leads to lower interest rates, which lowers borrowing costs for them, but a few days back Anand Mahindra tweeted, "Low inflation is often a good thing. But like blood pressure, it may not always be a sign of health if it keeps falling. Moderately high inflation signals growing consumption and spurs investment. Some pump-priming via lower interest rates and measure to increase consumption may help." How can consumption increase when the labor force participation rate dropped to 49.7% in 2018 from 55.5% in 2012 and the number of workers actually fell to 461.5 million in 2018 from 467.7 million in 2012. Lower borrowing costs will not be an incentive to set up new businesses if demand is weak because fewer people are working. Governments depended on "unconventional" monetary policies by central banks to rescue the global economy from the 2008 crisis, wrote A Ranade. Recently, Pakistan and Turkey sacked chiefs of their central banks for not following government orders. "India's central bank has to juggle the apparently conflicting task of raising money for the government while keeping interest rates high enough to signal scarcity of savings (and keep inflation in check). Last year, more than 80% of the center's borrowing was eventually funded by RBI, which is dangerously close to monetization of the deficit." Government revenues are lower than estimates. wrote P Mehra, and "To fill the gaping whole on the tax revenue side, significantly higher non-tax revenue has been budgeted than the estimates of the interim budget." Tax rates are too high in India, wrote SS Bhalla. We need not worry about being stuck in a 'middle-income trap' because our policies are trapping us in a low-income one, wrote A Chhibber. We are stuck.