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Reserve Bank of India reduces key interest rate

The country’s central bank lowers full-year growth forecast.

The Reserve Bank of India (RBI) has reduced its key interest rate to 7.75 per cent from 8 per cent for the first time in nine months to spur economic growth.

India’s central bank also reduced the amount of money that banks need to keep in reserve. The move is expected to provide 180bn Indian rupees of extra cash for them to lend.

Although, India’s economy grew by 5.3 per cent in the July to September quarter from a year earlier, but consumer price growth has slowed in the recent times. In December 2012, the country’s wholesale price index declined to an 11-month low of 7.18 per cent.

Anticipating further slowdown in inflation in the near future, the RBI, in a statement, said that the slowdown in the rate of inflation “provides space, albeit limited, for monetary policy to give greater emphasis to growth risks”.

As well as fall in domestic demand, Indian exports and manufacturing sector were affected due to the slowdown in the global economy. Moreover, delay in economic reforms made foreign investors cautious of entering the country.

For the fiscal year 2012-13, RBI has lowered its full-year growth forecast to 5.5 per cent from its earlier forecast of 5.8 per cent.

Sujan Hajra, chief economist at Anand Rathi Securities in Mumbai, told the BBC: “The Reserve Bank of India is definitely less hawkish in its statement, and we think it will remain in the easing mode in 2013.”

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Is anyone prepared to solve the NHS funding crisis?

As long as the political taboo on raising taxes endures, the service will be in financial peril. 

It has long been clear that the NHS is in financial ill-health. But today's figures, conveniently delayed until after the Conservative conference, are still stunningly bad. The service ran a deficit of £930m between April and June (greater than the £820m recorded for the whole of the 2014/15 financial year) and is on course for a shortfall of at least £2bn this year - its worst position for a generation. 

Though often described as having been shielded from austerity, owing to its ring-fenced budget, the NHS is enduring the toughest spending settlement in its history. Since 1950, health spending has grown at an average annual rate of 4 per cent, but over the last parliament it rose by just 0.5 per cent. An ageing population, rising treatment costs and the social care crisis all mean that the NHS has to run merely to stand still. The Tories have pledged to provide £10bn more for the service but this still leaves £20bn of efficiency savings required. 

Speculation is now turning to whether George Osborne will provide an emergency injection of funds in the Autumn Statement on 25 November. But the long-term question is whether anyone is prepared to offer a sustainable solution to the crisis. Health experts argue that only a rise in general taxation (income tax, VAT, national insurance), patient charges or a hypothecated "health tax" will secure the future of a universal, high-quality service. But the political taboo against increasing taxes on all but the richest means no politician has ventured into this territory. Shadow health secretary Heidi Alexander has today called for the government to "find money urgently to get through the coming winter months". But the bigger question is whether, under Jeremy Corbyn, Labour is prepared to go beyond sticking-plaster solutions. 

George Eaton is political editor of the New Statesman.