dancingdiva

Outlook for the Indian Economy

Please note the Asian currency crisis was late in 1997 so I assumed, perhaps incorrectly, that it was not totally responsible for the sharp drop in 1997 GDP.

Outlook for the Indian Economy

Thank you for your informative article but I have some questions.

Inflation was quite high in India for much of 1994 and all of 1995. As a result the Indian govt boosted nominal interest rates to a high level and kept them there through much of 1996. I note on your chart 1997 GDP growth rate fell quite sharply relative to the previous few years and I assume it was due to the higher interest rates and its lagging impact.

History looks like it is repeating itself. What makes you think the high level of growth in 2009 and 2010 can occur under since interest rates are likely to remain at a high level to curb inflation? Or was it something other than the high interest rates that had an impact on the 1997 economy?