Indian Interest Rates Have Overshot

Reserve Bank of India (RBI) governor Subbarao’s decision to hike short term interest rates by 50 basis points on July 26th was a mistake. Monetary policy operates with a lag. Many of the earlier interest rate hikes are yet to filter through to economy.
The RBI is trying to fight inflation by raising rates and squeezing out demand. In the absence of fiscal policy action, the burden of inflation management falls on the RBI. The RBI is, however, fighting a lost battle. Interest rate increases are unlikely to be effective in controlling inflation and may in fact exacerbate the situation by choking investment and supply. More...

Generational Change

India finds itself in the midst of a large generational change. The old guard is making way for the new. In many places where the change has not taken place, it is imminent.

In politics, the two main national parties are the Congress and the Bhartiya Janata Party (BJP). More...

Fatigued !

Fatigued, in one word captures what market participants around the world are feeling, especially in India. The Indian market peaked in October 2010 and has been on a downward trajectory since then. The markets have endured every imaginable kind of bad news during this period. More...