"[In 1991 India had] a noxious combination of elevated fiscal deficits, a high current account deficit and double-digit inflation…Cut to early 2011…Much has changed since 1991, mostly for the better. Yet, there is very little to distinguish India in 2011 from India in 1991 as far as three important indicators of economic health go: the fiscal deficit, current account deficit and inflation."
— Niranjan Rajadyaksha says 2011 is India’s year of living dangerously, ie. a fiscal crisis is possible. It is worth pointing out that inequality is partly the cause of the fiscal deficit—to prevent the rest of the country from feeling left behind, the government is using borrowed money to guarantee employment. Inequality is also partly a cause of inflation, as the newly rich middle classes bid up the price of scarce goods, like housing, and sons from the villages leave their family farms to find work in the cities, thus lowering production of agricultural goods in the short term. Agricultural output, of course, has not kept up with growth elsewhere and has even shrunk in some years like 2002-2003.
