Rajeev Malik: Lower growth, higher inflation

The government finally appears to be in sync with the Reserve Bank of India (RBI) on the broader macro management. Fiscal dynamics have been a key factor in making the aggressive tightening in the current cycle less effective. The solution to that is not necessarily even more tightening – which may still be needed – but greater fiscal responsibility, as the long overdue increases in local fuel prices will finally show. Still, more fiscal adjustment is needed.
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