This verse consists of three syntactically separate sentences. They are: 1) yaj hi kiccaj apaviddhaj (what should be done - is rejected). The subject is the adjective kiccaj (what should be done, nominative singular). It has an attribute, the relative pronoun yaj (that, which, nominative singular). The verb is omitted, implying the verb "to be". The object is the past participle apaviddhaj (rejected, nominative singular). The particle hi (indeed) serves mainly for metrical purposes. 2) akiccaj pana kayirati (what should not be done - that is being done). The subject is the adjective akiccaj (what should not be done, nominative singular). The verb is in passive, kayirati (is being done, 3rd person, singular, passive, indicative, present tense). The particle pana (indeed) serves mainly for metrical purposes. 3) unnalanaj pamattanaj tesaj vaddhanti asava (taints of those, who are proud and negligent, surely grow). The subject is the noun asava (taints, nominative plural). It has an attribute, the pronoun tesaj (their, genitive plural). This word has two attributes, the adjectives unnalanaj (of insolent ones, genitive plural) and pamattanaj (of negligent ones, genitive plural). The verb is vaddhanti (grow, 3rd person, plural, active, indicative, present tense).
In Bhaddiya there was a monastery with many monks. There was a sort of competition amongst these monks: who will make more beautiful ornamental slippers to wear. As a result of this, they neglected their meditation and they made no progress in spiritual matters. The matter was reported to the Buddha who admonished the monks from Bhaddiya. He told them this verse (and the following one, DhP 293). The monks realized the error of their ways and from that time on strove diligently to reach the Awakenment.