From the seductive voice that whispered mellifluously that we are the fastest growing economy in the world to a rapidly decelerating one which requires to be pump primed with a stimulus. This is not transient but acute and going forward, the picture gets worse. Echo chambers don’t tell you what the mirror does. The proverbial Botox dosage has run its course, the horizontal forehead lines and crow’s feet are out for all to see. The sag is back, for five straight quarters the trend line is southwards. Services activity plunged to a four-year low in July, factory output sank to a four-year low in June, farm distress has acquired a scary dimension as pricing erosion has left the agrarian landscape devastated. Infra sector plummeted to a 19-month low in June, 15 of 23 manufacturing industries recorded a contraction, adding to concerns over the state of the economy and, finally, the GDP print for the first quarter turned up at 5.7 lowest in 13 quarters. Once again underlining that economic metrics cannot be airbrushed.

In 2017, the official unemployment rate was just below 5 per cent. However, a report by the OECD found over 30 per cent of people aged 15-29 in India are not in employment, education or training (NEETs).

Agriculture produces 17.4 per cent of economic output but, over 51 per cent of the work force are employed in agriculture. This is the most inefficient sector of the economy and reform has proved slow.

Faced with a historic credit slump which remains at a 50-year low. A result what is now ubiquitously known as the twin balance sheet problem. Weak investment demand, partly emanating from the twin balance sheet problem (a leveraged corporate sector alongside a stressed banking sector) is a major challenge. To understand this, the dysfunctionality has to be broken into two streams:

 - What’s wrong with company balance sheets?

Companies have too much debt and little money to repay. Simply put, they seem to have chewed more than they can swallow. As per the Economic Survey 2016-17, it was reported that around 40 per cent of the corporate debt it monitored was owed by companies which had an interest coverage ratio less than 1. This is a worrying figure. The interest coverage ratio compares the loan interest payments with the operating profits. This helps you understand if the company can repay its loan interest using the profits it earns from its core business. If the figure is less than 1, it means the company’s operations do not generate enough money to even repay the interest, let alone the entire amount.

 - What about the banks?

A bank’s key source of profits is the interest it earns on loans. If a company fails to pay back interest on the loan, the bank loses its profit. Plus, the bank also loses the money it gave out as the loan. Here’s an example why: You deposited Rs 1,000 with a bank. The bank then gave two loans of Rs 500 each. It expected to earn Rs 10 as interest from each loan account. Of those two loans, one defaulted. So the bank was left with just Rs 510 – Rs 490 less than what it had. And unfortunately for the Indian banking system, 9.5 per cent of the total loans turned out to be bad loans, as per RBI data. “More than four-fifths of the non-performing assets were in the public sector banks, where the NPA ratio had reached almost 12%,” the Economic Survey reported.

Throwing a curve ball, Finance Ministry officials recently said the revenue shortfall in 2017-18 could be at least $13 billion if the economy failed to recover. All because you have been blindsided after choosing to disregard tell tale signs of the deep rot that has set into the economy which is much like a kite as it dances forlorn in the face of a hurricane tattered with the ferocity of the wind speed. Now, with real time inputs for the second quarter showing that the initial GDP numbers have fallen off the cliff, panic has set in. Worse still, you choose to hike excise duty nine times to soak up a humongous Rs 273,000 crore at the consumers’ expense by not allowing a pass through of a long-standing benign global crude regime. Nobody knows where that cash has been deployed and then you tell the states to cut taxes on petro products, welcome to the theatre of the absurd and the land of the bizarre. When you come to a fork in the road you have to decide which way to go. What did you do instead?

 Idols of a cave

Over three years and a bit, you have disregarded all calls for reform despite having the necessary mandate to go ahead and set the economic agenda. Again, imprisoned by the conventional idea of pushing welfare economics and displaying a peculiar obtuseness by not taking decisions despite having plans on the drawing board makes the whole three-year wait even more infuriating. After making a bold statement in the 2015 budget to privatise rogue bank – IDBI – you have allowed it to fester, bulking it up on NPA steroids to become unsaleable, its gross NPAs now an industry leader at 24 per cent (for every 100 bucks in the bank, 24 are bad). Despite making grandiose statements on disinvestment and drawing up lists, the inability to sell even one sick and paralysed entity to a strategic investor has shown fallibility beyond comprehension. Idols of a cave. The overriding obsession with a ratings upgrade with an eye on not moving the FRBM needle has made us ignore two things at our own peril – firstly, India has got only one ratings upgrade in 25 years and, secondly, there is a provision in the Act which allows a slippage of 0.50 per cent.

Caution has remained the buzzword, yet you have allowed an American-educated confused desi Arvind Subramanian to actively bait Mint Street and most notably belittle them for rigidity in inflation watching and targeting. Fixated on digging out black money, tax terrorism of a sinister kind has returned, the demand destruction caused by DeMo ravaging the economy leaving a wasteland in its wake. Wall Street is peaking almost daily and in a spitting image so are Indian markets. There is no hint of a global contagion, money is being made across equity and debt markets, but India finds itself in a microcosm of misery due to staid and safe economics where the mandate itself has become a burden instead of a boon. Jobs have evaporated into thin air, the formal and informal economies converging, creating a dangerous confluence where the slowdown is structural and deep rooted.

 Only option

It may be too late for incentives and subventions for private investment and gross capital formation simply doesn't exist. Public spending ramp up is the only option to shoot your way out of trouble. We appear inert and lassitude driven when it comes to land, labour and capital reform. Always struggling to do what is right. The economy is beyond quick fixes. Private capital expenditure remains weak due to low capacity-utilisation, over-levered corporate balance sheets, sluggish global growth and, therefore, weak exports. However, the government has been increasing public capex and, more importantly, executing well across a number of projects, including road construction, railroad upgrades, and other long-term infrastructure improvements, such as coastal transportation. This uptick in government capex is likely to lead to better order books and earnings for industrials engaged in these activities. This is the only was forward to beat the rapidly enveloping contraction across the economic vector. The India story has suddenly gone a little flat as the Modi-motivated rally fades. This talk of stimulus, which may put to question commitments to fiscal consolidation, in itself reflects government concern that growth is going off track.

Upstreaming and mainstreaming reform, however unpalatable it is, remains the only option for a capital, energy and infrastructure deficit nation like ours. No one begrudges the farmer getting a leg up, no one begrudges improving the lot of the vast swathe of poor and underprivileged in this country, but there is another India too – the middle class and the various strata that make up the pie, the restless youth who are awaiting jobs as they come off the conveyor belt. Width and depth of reform is the only answer to India's litany of ills and woes. Economic transformation can only come with growth and development. For that India needs a constant measure of adrenaline shots of metronomic reform. There is no one off, it cannot be episodic, it has to be a continuum. Arrogance at the end of the day leads to hubris.

@sandeep_bamzai