.... The forthcoming Budget comes at a critical juncture for the economy. Growth has slowed down perceptibly. Investors' sentiment is at its weakest since 2004. The global economic situation is fragile. This will hurt our external demand prospects at a time when the current account deficit threatens to cross the dangerous mark of 3 per cent of GDP. Interest rates remain high and the RBI does not seem to be in the mood to relent as long as inflationary pressures remain, fuelled primarily by a profligate fiscal policy and supply side constraints that are becoming entrenched as investment in new capacities is simply not forthcoming. Therefore, the first and most important task for the coming Budget must be to work with monetary policy to eliminate inflationary pressures, thereby allowing interest rates to come down......
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