A lesson to learn: Economic problems can have counter-intuitive solutions

One of the lessons which the Narendra Modi government has yet to learn is that the solutions to economic problems can be counter-intuitive. In other words, not the first thing that strikes your mind. As we saw with demonetisation, the solution to black money is not necessarily to attack cash holdings, since most of the old notes came back to the Reserve Bank. Similarly, the solution to a tax shortfall is not necessarily to raise tax rates — a suggestion aired briefly in the context of the goods and services tax (GST) — any more than the solution to a trade deficit is to put up the .....

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