Saturday, February 15, 2014

Indian Economy is Very Vulnerable

Since December 2013 the US central bank Federal Reserve has decided to scale back its dollar printing program called QE (Quantitative Easing). The Indian economy is very fragile looking at these new developments. Raghuram Rajan, the Indian central bank RBI's governor, has criticized the uncoordinated policy of the selfish US Fed saying the withdrawal of stimulus by the Fed is rocking the emerging market economies. Despite this, he is assuring the Indian public that the Indian economy is quite resilient and immune from any shock coming from the US central bank. In my following economic report I call Raghuram Rajan's bluff and analyze the impact of US Fed's tapering policy on the Indian economy.