Like other emerging economies, India would seem to be having a 'good crisis': after an initial hiccup in 2008, growth rates have resumed to near pre-crisis levels, showing that the world economy is neither as global or as US-centred as has been widely believed. However, while the drivers of India's growth are mainly national, so are the obstacles it may come up against. At the present time the chief among these is the continuing attachment of India's economic policy-makers to an essentially neoliberal policy paradigm which misunderstands its growth pattern over the past several decades and exacerbates rather than corrects its instability. The government's policy response to two critical problems - tackling inflation led by food prices by cutting interest rates; and seeking to keep government expenditure from rising so that short term capital inflows will continue to cover the current account and underlying trade deficits - already seems to be slowing growth.
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