The worst may be over for the country’s economy in a season of international turmoil.
Policy-makers in the North Block and RBI acted with speed at the weekend to address the emerging challenges even managing to address a growing negative sentiment.
A month ago, India was grappling with a severe liquidity crunch, which was choking the credit market, while inflation close to 12 per cent threatened consumer confidence and a depreciating rupee made imports costlier. Banks have now signalled that lending rates may soften.
“At present, India is in a comfortable situation, thanks to the steps taken by the government and the RBI,” said credit rater Crisil’s principal economist D.K. Joshi.
Saugata Bhattacharya, vice-president at Axis Bank, said the weekend action by the Reserve Bank addressed a great uncertainty concerning a shortage of liquidity that would have hit lending plans of banks.