Editorial Board
Politicians Talk, the Rupee Drops, India’s Economy Tanks
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India’s economy has stalled. Growth in the second quarter fell to 4.4 percent at an annual rate, down from 8 percent two years ago. The rupee has slumped. Consumer-price inflation is about 10 percent and rising. The country faces what could be a full-scale financial crisis.
This would be a testing situation even if India had a well-functioning government, but it doesn’t. With a general election due next May, politics are paralyzed. Between now and the vote, the Reserve Bank of India, led by its new governor, Raghuram Rajan, can do only so much -- but the central bank can at least resist demands to make a bad situation worse.