Stop being in denial, please

All macroeconomic signals in India are flashing red. The country’s current account balance and the fiscal situation are in disarray. Even worse, the government doesn’t seem to have a coherent strategy to address either. Market-based price indicators – the rupee, bond yields and equity markets – risk spiralling out of control. The stickiness of inflation is another cause for concern. In fact if one looks at a chart of macro-based indicators, there seems to be no difference between the situation today and in 1991: India’s fiscal deficit and current account deficit are as bad, and so is inflation.

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