India’s central bank defied widespread calls on Monday to revive the flagging economy with cuts in interest rates and cash reserve minimums at banks, putting the onus on a fractious coalition government to pull the country out of crisis.
The Reserve Bank of India left its policy repo rate at 8 percent and the cash reserve ratio at 4.75 percent, saying a rate cut now could “exacerbate” the country’s inflation, the highest among industrialized or BRIC nations.
Bonds, stocks and the rupee fell after the decision and economists scaled back their expectations for future rate cuts. Calls for action from the central bank, including from corporate India, had intensified after economic growth in the March quarter slumped to its weakest annual pace in nine years.
“India is in this deep crisis due to the lack of proper governance,” said A. Mahendran…