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China Economy: India’s Interest Rate Cut Exposed the Fragile Side of Its Economy

China Economy recently reported that India’s central bank just announced an interest rate cut. This is the first time since the end of last year that an Asian central bank has cut its interest rate. The cut brought India’s interest rate to a seven-year low. Apparently, the Indian economy is facing a serious challenge. Ever since Indian Prime Minister Narendra Modi’s banknote demonetization last year, India’s manufacturing and consumer spending has been suffering major declines. The Modi administration also started its tax reform in July, which caused serious chaos in India’s supply chains as well as distribution channels. It significantly worsened India’s commercial market to its “lowest point” since the global financial crisis. Although the tax reform may have some benefits in the long run, the solution for the immediate chaos should not depend on creating a distraction by triggering military disputes with neighboring countries, which will prove to be “extremely stupid.”

Source: China Economy, August 7, 2017