There were sighs of relief in India last week when Federal Reserve Chairman Ben Bernanke unexpectedly announced the U.S. central bank would continue buying Treasury bills and other government securities at a rate of $85 billion a month. Worries over the past few months that investors would flee riskier emerging markets like India in anticipation of better yields on “safe” Treasuries had sent the rupee and India’s major stock exchanges plummeting.
But the Fed’s action was the one note of good news for an Indian economy that is still in crisis. The Indian government this month cut its gross domestic product forecast for the current fiscal year to 5.3 percent from 6.4 percent. India had already seen GDP growth fall from 8 percent in 2010 and 2011 to just 5 percent last year, the worst number in a decade.
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