India's credit rating from stable to negative.high fiscal deficit, heavy debt burden and slow reforms are three complaints against India's management .We should focus on reduction in subsidies, a national service tax and a liberal foreign exchange regime.Corruption is a main cause for India's poor showing. Mr Stephen Covey has shown that the lower the GDP, the higher the Corruption Index and that India's low GDP matches its high corruption.
The Reserve Bank of India bears much of the responsibility for India's slowdown. Using the classic cure against inflation, it made the price of money high and hence, made it costly to acquire capital. It has barely cured inflation and instead penalised heavily honest savers in the country.The RBI failed to see that the culprits were mainly property developers and politicians; it has punished everyone, the good ones and the bad ones alike and, thereby, has indirectly promoted corruption.
The true cost of corruption depends on where it occurs. A man can carry a backpack of 30 kg for miles, but will find it difficult to do so on his head even when it weighs appreciably less. He may carry in his hand a suitcase weighing no more than 20 kg for a short distance only, but will be hobbled when even a kg is strapped to his ankles.
With corruption, it is the other way around. A petty official can be a nuisance but may not retard the economy much, but those at the top can, and do, slow down the economy inexorably.India's economic growth rate slipped to 5.3 per cent in the fourth quarter of 2011-12, lowest in nearly 9 years due to poor performance of the manufacturing and farm sectors.Persistent sluggishness in the economy due to slowdown in the manufacturing sector, coupled with decline in mining and quarrying, is likely to put pressure on the Reserve Bank of India to cut interest rates in its policy review in June.
