Monday, July 2, 2012

Heed the BoP warning

......Which is exactly how the warning issued by RBI, however carefully worded, should be interpreted. It is implicitly stating that there is only so much the central bank can do. It has probably reached the limits of its policy capacities. From here on, therefore, the inability of the government to contain the fiscal deficit slippage would exact a severe macroeconomic price from an economy that is already struggling.

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