Posted 1/30/2024, 1:21:12 AM
India Focuses on Inflation Over Growth Amid Liquidity Drought, While China Struggles With Excess
- China has too much liquidity; India has a liquidity drought due to lower government spending before elections.
- India's growth rate gives it breathing room to focus on inflation before boosting investment after elections.
- India may be angling for a sovereign credit rating upgrade by keeping deficits low.
- The RBI is also wary of easing liquidity to avoid fuelling inflation and protect its credibility.
- Indian banks face margin squeeze if liquidity tightness continues; Chinese banks struggling despite excess liquidity.