...............Rumour has it that there is a standoff between the Ministry of Finance and the Reserve Bank of India over interest rate policy. Given the government's own failure, the central bank has been forced to take on the burden of combating inflation, leading to the sharp rise in interest rates. But since the Finance Ministry does not seem to like that, it is reportedly using the ECB lever to counter the impact of the RBI's intervention on the corporate sector. Whatever the drivers, the process is increasing external vulnerability.
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