A deluge of rupees.

"S&P Global Ratings has reduced India's GDP growth projection to 6.3% for 2025-26, marking a 20 basis points (bps) decrease, whilst the forecast for 2026-27 has been lowered by 30 bps to 6.5%." "The Reserve Bank of India (RBI) has also revised its growth forecast downward for fiscal 2025-26 to 6.5% from 6.7%." TOI. In its April meeting. the Monetary Policy Committee (MPC) of the RBI reduced its policy rate by 25 bps to 6%. pib.gov.in. According to the State Bank of India, the RBI is likely to slash interest rates by a total of 75 bps in 2025. Mint. "India's foreign exchange reserves rose for the eighth week in a row to reach $688.13 billion as on April 25." "Foreign currency assets, a key component of India's reserves, rose by $2.17 billion to $580.66 billion." ET. When the RBI buys dollars in exchange for rupees it releases that amount of currency into the market. The RBI's task has been made easier by a stronger rupee which has jumped to 84 to one dollar from an all-time low of 87.95 to one dollar on 10 February 2025. BS. Forex reserves were at $638.70 billion on 28 February (MC), which means the RBI has purchased nearly $50 billion in one month. This translates to an injection of almost Rs 4.3 trillion into Indian markets. On top of that, the RBI will buy Rs 1.25 trillion of government securities through open market operations (OMO). In April, the RBI "conducted a Rs 400 billion OMO and a Rs 1.5 trillion variable rate repo operation, alongside two smaller OMOs." ET. The RBI is inundating banks with currency to force banks to lend at lower rates, which is supposed to entice businesses to borrow for new projects and thus create more jobs. Buying government bonds is almost the same as quantitative easing which is adopted when interest rates are near zero (Investopedia). Why didn't the RBI cut interest by a full 1% to 5.25% instead of these financial gymnastics, especially since the consumer price index (CPI) inflation fell to 3.34%, the lowest level since August 2019 (mospi.gov.in). The RBI has been asked by the government to maintain retail inflation at 4% with a margin of 2% on either side till March 2026. ET. Is the RBI not confident at being able to control inflation going forward? Despite RBI's efforts to increase borrowing, a first-of-its-kind Forward Looking Survey on Private Sector Capex by the government "projects intended private sector capex at almost Rs 4.9 trillion this fiscal year, about a quarter less than last year's plans. The slump reflects 'cautious planning after strong 2024-25', according to the statistics ministry." Mint. Companies will only invest in new projects if they are optimistic about higher sales. The government is celebrating a 17.6% rise in personal income tax  collections to Rs 13.7 trillion in 2024-25. TOI. While this allows our rulers to enjoy themselves, it slashes people's disposable income and the ability to spend. If people can't spend companies can't sell. They won't invest. Even if the RBI floods banks with money.