All indications are that the economy is overheating. But take a closer look, and things do not appear to be so bad.

by Manas Chakravarty - BWI

After four years of sizzling growth, signs of strain have started showing up in the economy. Inflation is well above the comfort zone, real estate prices have shot up and the rupee has recently touched nine-year highs against the dollar. Large parts of the country have to go without power for hours and the country’s creaking infrastructure is clearly finding it difficult to cope with the 9 per cent-plus rates of growth seen in the past couple of years. These signs of overheating have been worrying the Reserve Bank of India, which has been slowly but steadily raising its policy rate and increasing the cash reserve ratio — funds that banks must park with the central bank — in an attempt to arrest the runaway credit growth.

Click here for the full story.