.......... However the ground may have been prepared for the RBI to ease its hard line monetary stance and to cut interest rates. The apex bank has been rightly reluctant to do so because it wanted a convincingly steady fall in inflation over a period before acting. It may still wait for a few weeks. But it may have to act sooner rather than later because the tight monetary policy has choked investment and growth, as seen in the falling GDP figures. A reduction in interest rates by the RBI, effective fiscal measures on the part of the government and a growth-oriented budget can help to strengthen the hopes created by falling inflation.
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