While you are right in your assessmeet, no Indian government will survive if they drastically cut interest rates (currently 6/6.5%). Besides, most Indians are quite good at finding ways around arbitrary controls imposed by the government.
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Sure,
for now - it is a far fetched idea (after all they are running the deficit being financed from the outside) but But I think we both agree that having a mechanism in place moves it from the realm of outright impossible to probable.
Besides those rates being like 10-11% not that long ago if I recall correctly.
Yes, you are absolutely right. Though, the real rate of interest is marginally better now ( the inflation rate was a lot higher then)