ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Downward Rigidity of Indian Interest Rates

This paper tries to assess why lowering interest rates is proving to be hard in India. It highlights the role of three factors, namely high public debt and the structure of this debt, the overhang of non-performing assets, and the policy being pursued with respect to accumulation of foreign exchange reserves. These three factors are causally linked to each other and should not be looked upon as mutually exclusive contributors.

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