Growth is slowing. At the 5.3% official growth rate, India has grown the slowest in the March quarter in 8 years. Even that is considered suspiciously high, since we are shown a massive growth in exports and subdued imports that no other data point seems to corroborate. The Reserve Bank of India needs to cut rates, say many observers, while fighting for an armchair with yours truly.

RBI controls the rate at which banks can borrow from it, overnight, called the "repo" rate. If they do cut interest rates, how does it impact growth? The traditional answer — when banks can borrow at lower rates from the RBI, they will cut rates for industry and consumers, who will find their loans cheaper and thus make more profits, which will fuel investment and consumption and overall, more growth.

Let us pause for the realists to stop laughing.

In India, this "transmission" of interest rates is broken when rates go down. Bank loans can be at fixed or floating rates — for a fixed rate borrower (such as a

A lot has been said about diversification, where you spread your investments across various avenues. The plus point is that you don't have all your eggs in one basket, and that if one of your investments falters, another will balance it out.

Diversification in stocks means you buy many stocks, in many sectors. While that exposes you to a stock market crash, a fall in one sector doesn't usually hurt another. However you must be careful that these sectors don't impact each other; for instance, buying a steel maker and then a car manufacturer is not really diversification — a fall in car demand will hurt both sectors. Diversification is also employed by those that either have no time or skill to handle investing decisions themselves; often, it's known as a tool for the ignorant.

You could buy multiple asset-classes. Like Gold, real —estate, stocks, bonds, commodities and rare stamps. These asset classes, while providing a layer of diversification, often have varying liquidity problems.

You can't buy stocks on merit anymore. You can do the most beautiful analysis about a company that owns a toll bridge, and how many cars pass through it every day, and how they can increase the toll fees every year by 10%. And how there is this airport proposal which, when cleared, will dramatically increase toll fee collections. Finally that the contract with the government guarantees a 20% return on investment.

And all of this analysis tells you that the stock should be worth five times the current value in a few years. Yet, it all amounts to nothing when suddenly, the government decides not to allow any toll fee increases because of the bad political mileage they are getting for not keeping onion prices in check. And then the government runs out of money because of profligate spending on random other causes, and investment flows into the country stop because no one in power can take a decision anymore, and the powers decide to tax everyone they earlier hadn't taxed. To gather more