......While it’s convenient to blame the Reserve Bank of India’s aggressive monetary tightening for the slowdown in credit demand, a recent analysis by the International Monetary Fund (IMF) shows that higher real interest rates only account for about a quarter of the investment slowdown. Besides, the spurt in inflation that prompted the central bank to raise interest rates 13 times between March 2010 and October 2011 was occasioned by the government’s pathological refusal to do anything about the expansion of its own spending, which is estimated to have more than doubled in six years.......
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