.... India’s macroeconomic situation does look terrible. The fiscal deficit is likely to be at least 5.5 per cent of GDP, with negative surprises on both revenue and subsidy payments. The borrowing requirement of the government is already affecting demand, with yields spiking, bond devolvements and the RBI forced to carry out open market operations and liberalise FII flows into debt markets. Inflation is looking horribly sticky, with the rupee depreciation wiping out any gains from commodity price weakness. Growth is slowing and the external deficit is also starting to threaten the economy......
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