..........India therefore has an ample and growing cushion to absorb the rise in imports that precedes the revival of growth. There is, therefore, no downside to lowering the interest rate now. All that Raghuram Rajan has to do is abandon the belief that raising interest rates is the cure for all types of inflation; recognise that India is suffering from endemic cost push inflation born of supply shortages, and that the only cure for these shortages is economic growth.
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