.... The real problems lie on the supply side, which can be resolved only with structural reforms. Thankfully, government agencies began coming around to this view. The committee headed by Vijay Kelkar did some welcome plain speaking. “India is on the edge of a fiscal precipice,” it warned in the very first sentence of its report. RBI said the potential growth rate of the Indian economy—or the growth that it can sustain without setting off high inflation—was now down to 7.5%, around one percentage point lower than what it was in the boom. Private sector economists argue that it may have come down even more, a fair assessment since India has signs of excess demand even when growth is around 5.5%.......
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