Yet another set of Index of Industrial Production (IIP) numbers released on Friday has rung familiar alarm bells for action on the part of the government. Coming soon after the lower GDP numbers last week, the situation calls for immediate action.

The reasons for lower industrial production are well known. In the mining sector it is administrative measures that need to be taken, and surely the Supreme Court judgment on mining and mining leases etc does not mean the end of the world. There is a solution to every problem and if the government cannot find solutions it should take advantage of the vast pool of young economists to find a way out.

The government’s predilection for consulting only chambers of commerce and the same old business houses has not paid dividends as they only ask what the government can do for them, and not what they can do for the country. This may sound clichéd, but it is a ground reality and one that has got the country nowhere.

One of the most important issues impeding growth, for instance, is expensive capital. While in China a mid-level businessman or borrower pays an interest of three to four per cent, in India his counterpart will have to pay a minimum of 12 per cent.

The major failing of this government in dealing with the economy is its total dependence on foreign capital. They might as well invite the East India Company back. It is, typically, a colonial hangover that this government suffers from, even after 64 years.

Overseas Indians, like the overseas Chinese, are waiting for an honest environment so that they can invest their billions in the country. The government has long ditched Indira Gandhi’s clarion call for self-sufficiency and is paying heavily as a net oil and food importer.

The boom years India experienced following the 2008 collapse of the global economy was the liquidity pumped into the system by Western governments in the form of quantitative easing. The minute that became a trickle in 2011 India is in the doldrums. Now the West is again in quantitative easing mode and we will see liquidity coming into the country again, inducing that illusionary feel-good feeling.

India has no lack of money or gold. What the government lacks is out-of-the-box thinking to get these household savings and gold put to productive use. This would be a more permanent solution.

For years it has been recognised that barely five per cent of household savings enters the equity markets, and there have been studies on why this is so, and how it can be remedied.