Is their autonomy at risk? The answers to these questions will be shaped by how the current big issues are settled. 42. As in many economies, in India too, monetary policy was dominated by fiscal considerations during the 1970s and the 1980s. Large and growing fiscal deficits ended up being financed by the Reserve Bank.
But it has to be said that the housing market bubble, if that’s what it is, seems to be taking quite a long time to pop – if that’s what it is going to do. The ingredients we would look for as signalling an imminent crash seem, if anything, less in evidence now than five years ago. What then about funding vulnerabilities?