Amid stagnating real household incomes, declining corporate profits, and the threat of rising global protectionism, India’s official narrative—that its growth slowdown is merely a transient drag below a 7% potential real GDP—rings increasingly hollow.The fiscal toolkit deployed so far has included spending curbs and modest income tax cuts amounting to ₹1 trillion (0.4% of annual household income). Meanwhile, the Reserve Bank of India has resorted to rate cuts, hoping monetary easing will revive economic growth. However, this strategy presupposes that historical models still apply to a structurally altered economy. The problem lies in the RBI’s adherence to a monetary framework calibrated for a bygone era.
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