1: First, they must tackle India’s rotten banks. ||2: That might sound like a technical quibble—it is anything but. ||3: Bad debts have soared as the economy has slowed and infrastructure projects have got snared by red tape. Banks have chosen to “extend and pretend” loans to zombie firms. ||4: The cost of cleaning up banks’ balance sheets could be as high as 4% of GDP—slightly larger, in relative terms, than Wall Street’s bail out. ||5: But until the banks are fit enough to finance a new cycle of investment, no recovery will happen. ||6: Deeper financial reform is vital, too. ||7: Banks are forced to buy government bonds, giving politicians a blank cheque to borrow. Limiting that would help end the habit of reckless public deficits.