The economy is in chains. Experts advising it to jump.

"At the current rate of growth, India will become a $5 trillion economy in a decade from now, which would be almost twice as long as the government wants," wrote an editorial in the Mint. This is because the growth rate of our gross domestic product (GDP) has fallen to 4.5%, the lowest in 6 years. The Reserve Bank (RBI) is expected to cut interest rate for the sixth time this month and the government is being urged to relax its fiscal deficit target. "For starters, if the economy's growth rate is 2.5 percentage points below India's potential, then there is an escape clause even from the Fiscal Responsibility paradigm to pump in money," wrote Ajit Ranade. "In that sense, it may be possible for the Budget to propose a deficit of 3.5% or 3.8% of GDP." That is happening already. "India's fiscal deficit in the first seven months through October stood at 7.2 trillion rupees ($100.32 billion), or 102.4% of the budgeted target for the current fiscal year." The danger of an overshoot of fiscal deficit is a cut in credit rating which will increase borrowing cost for Indian companies and the government and there maybe a sudden fall in foreign investment in our markets. "There is, however, space for for the overvalued rupee to weaken, say up to a level of 75 to the dollar, but not beyond, and certainly not abruptly," wrote Ranade. That may not be in our hands as, according to the Bank for International Settlements, "Average daily volumes for rupee in the UK soared to $46.8 billion in April", compared to $34.5 billion within India. It is not just the Real GDP that is down. "The nominal GDP, a number we rarely watch, has come in at 6.1% for Q2 and just 7% for the full first half. This number is scary because it means that all of India's output, rather earnings before interest, taxes, depreciation, and amortization (Ebitda) grew by 6.1% in Q2 when the government was borrowing money at more than 6% and industry at nearly 9%," wrote Latha Venkatesh. "Why would any company take loans for production at 9% if Ebitda grows only by 6%." Recent exposures of scams at non-banking financial company (NBFC) IL&FS and cooperative bank PMC Bank have severely affected credit to industry. "The crisis of confidence in India's financial sector comes at a time when real credit flow (adjusted for inflation) has slowed sharply, mirroring the slowdown in Asia's third-largest economy," wrote Bhatia and Bhattacharya. "Many experts expect the real fiscal deficit, including those hidden in the Food Corp of India and the Power Finance Corp and including the deficits of the states, to be at 9%, which is the rate at which household savings is growing." So, if the government sucks up all of the savings there is nothing left to lend to the private sector. Only 4 countries, South Korea, Taiwan, Chile and Israel have become rich from poor, wrote Kelkar and Shah. "In all those countries, growth came as a result of improvements in state capability." In India, on the other hand, higher GDP growth results in reduced state capability, as seen after 2005. The economy is in a straitjacket. Experts are advising it to jump.