Make new investments and do what with it?

"Despite the massive windfall gains from fuel taxes and GST collections, the Centre continues to borrow heavily from the market, with the total drawdown crossing 90 percent of the notified amount so far or 46 percent of the total borrowings for FY22 (1 April 2021-31 March 2022), even though the second quarter is only halfway, as per a report," Economic Times (ET). "Despite the second COVID-19 wave, overall Q1 tax collections rose 39 percent to Rs 5.6 lakh crore (Rs 5.6 trillion)" as "the Centre collected a whopping Rs 94,181 (Rs 941.81 billion) crore from excise duty on petrol and diesel, which was 88 percent more than Q1 of FY21". Average yields across government bonds of different maturities was 6.32%, pushed down by the RBI's announcement of quantitative easing of Rs 250 billion next week. "The government's move to pass on increases in global crude oil price to consumers, but prevent corrections through taxes, has raised concerns on inflation among the Reserve Bank of India's (RBI's) monetary policy committee (MPC) members." Times of India (TOI). But they do nothing except talk. Though it raised its inflation expectation to 5.7% from 5.1% in 2021-22, the RBI said that this is within its projection and maintained its accommodative stance which means a bias towards reducing rates, TOI. "A surge in commodity prices is aiding the exchequer by boosting the government's revenue receipts from goods and services tax (GST), said experts. "Industry representatives said rising commodity prices, especially of metals over the past one year which raised the input costs in many industries, contributing to buoyant GST collections, as rising costs get passed on to the final product," Mint. "Large fast-moving consumer goods (FMCG) companies said they have raised prices in the September quarter as higher input costs continue to remain a cause for concern," Mint. "Firms are battling multi-year high inflation." "While the Prime Minister and finance minister politely urged industrialists to whet their appetite for risk and make substantial investments, our commerce minister, according to several media reports, made a stern speech advocating socially responsible and 'nationalistic' behaviour at a recent event organized by the Confederation of Indian Industry," wrote Diva Jain. First raise excise duty on raw materials, which forces companies to raise retail prices, and then rake in humongous GST collections on the retail price. This is 'reverse voodoo economics', with very high taxes, high government borrowing, high inflation, loose monetary policy and diktats on private businesses. Apparently, it is to be lauded. "So, it is not necessarily the case that weak demand conditions would hold back capital expenditure. An investment boom can create a virtuous cycle of supply and demand," wrote Prof VA Nageswaran. Companies look to how much spare capacity they have before investing. Capacity utilization (CU) fell to 68.6% during the September to December quarter 2019 and growth rate of GDP fell to 4.1%. CU increased to 69.4% in January-March 2021, since when we had a ferocious second wave of coronavirus infections. Even as ministers accuse companies of being anti-national in not wasting capital on unnecessary expansion the government is trying to restrict Amazon, Walmart and India's Tata Group by planning a "state-sponsored open network for digital commerce", wrote Andy Mukherjee. "The winner may be someone pursuing a different business model for aggregating supplies. Mukesh Ambani, India's richest man, controls both the largest chain of physical stores and the biggest telco." Farmers in Punjab have been barricading another rich tycoon Gautam Adani's Logistics Park in Ludhiana, The Wire. "Earlier this month, the Adani group filed a petition in Punjab High Court saying it will be shutting down operations at the Kala Raipur multi-modal logistics park after having incurred huge losses due to the dharna (sit down protest). The protesters feel this is a victory." If the government wants more investment it needs to generate confidence and trust, wrote Jain. Voodoo is scary. So is reverse voodoo.