The wages of policy inertia and profligacy

There is growing official recognition that the economic slowdown is severe. This week, Prime Minister Manmohan Singh admitted that economic growth in the current fiscal year would be 7%. The Reserve Bank of India is also likely to cut its growth forecast to the same level when it presents its monetary policy on 24 January. The official growth forecast has been brought down over the past few months with metronomic regularity, as harsh realities trumped airy hopes.

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