Lets first see the Patient
Problem no 1 - Falling Consumer Demand and Spending
Lower disposable income and staggering unemployment has resulted in lower consumer demand relative to the supply for 4 years - 2017–2018, 2019–2020, 2020–2021 and now 2021–2022
People are simply not spending money and expanding their range of purchases.
This is a Huge Cause of Economic stagnation.
Under MMS even though Bad Inflation was around 15%, Spending and Demand were still much higher so the economic damage was much more limited.
Solution - Increase Disposable Income of the Middle Classes!!!
How?
Bringing in Foreign Investors for Manufacturing , Invest more money into Industries, Reduce Direct Taxes, Offer Tax Credits and Incentives, Bifurcate between High Interest Yielding Deposits and Low Interest Loans
Problem 2 - Falling Borrower Confidence and Economic Failure
Borrowers once borrowed a lot of money. Even if 8% defaulted, 92% paid off their loans and interests well and kept the clock ticking.
Today Borrowers are very hesitant to borrow money to invest in India. The criminalization of defaults is a huge reason. Most Borrowers decide not the expand their businesses or decide to invest overseas. Even the Big Companies (Except Reliance and Adani who have a Crony link) are investing overseas.
So rather than 10000 eggs in 100 baskets , we have 10000 eggs in 15 -20 Baskets which is far more risky.
Banks are lending more and more to fewer and fewer borrowers and due to Demo they have huge liquidity to get rid of.
Solution - Dont Criminalize defaults without strong evidence, Increase NPA classification period from 90 days flat to 90 days -5 Years depending on the nature of loan, RBI must be held accountable for missing things in audits, Pay more money to Valuators but hold them accountable for wrong valuation
Problem 3 - Lack of Foreign Investor Confidence in India Inc
Sure FDIs have increased as per reports.
Yet most of those FDIs are investment into Companies and their shares rather than investment into the Indian Economy and People.
For instance in 2020 - FDIs rose by 64% relative to 2019 but 91% of those FDIs were related to 5 Specific Companies. This only causes bloating of shares of these companies. Ambani may have another 400 Cr wedding for another daughter but it wont affect India by even 0.1%
What made our economy boom from 2000–2010 was that Foreign Investors invested far more widely.
Foreign Investors hate our Tax Structure (Toyota, Bosch, Volvo and Caterpillar have all scrapped their Phase III and Phase IV investments into India from 2017–2020 and Nokia packed up and left), our Labor Laws (Winstron did not produce for 182 days, in China over 4 years the non productive days were 7 ), Our Judicial Horror System (Cairn Energy, Amazon, Rolls Royce)
Solution - New Courts consisting of 49% Foreigners to arbitrate disputes involving foreign investors with no SC jurisdiction, Standard Labor Laws, Zero Tax Laws etc. You want your people employed, DONT BE GREEDY FOR TAX.
Problem 4 - The Holes in the Indian Economy
In 2016, we had a Parallel economy of 28 Trillion. This could have grown to 45 Trillion by 2019–2020 out od which at least 27 Trillion would have been bridged to the main economy.
Instead we have a Hole of 4.5 Trillion thats now as big as Rs. 10–12 Trillion
Add to this holes caused by GST of 1.74 Trillion and around Rs. 3 Trillion of other miscellaneous holes and we get a Rs. 17 Trillion Hole
This hole is not even part of the Budget deficit.
This Hole sucks up a big chunk of economic initiatives which become worse because the Duffer Sarkar keeps ruining things.
Solution - Step Printing. Careful , Cautious Printing to ensure that the holes are plugged with Stimulus. First load up the Parallel economy to 45 Trillion from around 25 Trillion today and then bridge the Parallel economy to the main economy using Inclusion of the Organized Sector.
Problem No 5- Mediocrity and No Quality related standards
This is self explanatory.
Problem No 6 - No Investment to improve technology and services
In 2010, Our Service Sector commanded a 70.4% exposure in Foreign Projects and Foreign Services for Foreign Clients in Foreign Countries (4F).
Today its only 40.6% , a crash of nearly 30% in 10 years.
In 2010, over 4500 Firms had business contracts with foreign projects, today its a mere 400 plus.
This is because we didnt evolve and put money in MLAI, Bots, Automation of IT etc and today Singapore, Taiwan and S. Korea have stolen a chunk of our businesses.
Solution- Invest more money into training and research and education to produce Garage based creators who wont fly off the USA or Singapore
So now the Economy and its problems are clear. Who will implement any of these suggestions? Nobody