...........The day after the Union finance minister categorically, and quite correctly, ruled out any scope for fiscal stimulus, the Reserve Bank of India (RBI) suddenly discovered elbow room for cutting interest rates to push growth. This is the new anatomy of the Indian economy: since there is no headroom for fiscal stimulus, there has to be elbow room for monetary policy action. The compulsions are clear. Both these policy “guidance”—one negative and one affirmative—came as soon as the data showed that growth had slumped to its lowest level in nine years’ threatening to pull the gross domestic product (GDP) growth to below the comforting number of 6%..........
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