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How the World’s Fastest-Growing Economy Plunged Into Stagflation

Jan. 14, 2020, 11:00 AM

Just two years ago, Prime Minister Narendra Modi was helming an economy expanding 8%, spurring optimism India was on a path to become a major global growth driver.

Now, stagflation looms as the economy grinds toward its slowest expansion in more than a decade and inflation spikes above the central bank’s target, driven by higher food prices. Social unrest against a restrictive new citizenship law is yet another challenge.

Demonstrators shout slogans during a protest against a new citizenship law in New Delhi, India in 2019.
Photographer: T. Narayan/Bloomberg

And there are few good options to deal with the slowdown. Dwindling government revenue and an already-stretched budget limit scope for fiscal support, while the shock 7.35% surge in retail...

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