Indian economy is at a slow down with economic growth near 5% only now and it's currency has sharply depreciated with a huge current account deficits. India was too sloth in building a big foreign exchange reserve while it was in good times, when a lot of foreign money was coming into India post 2008. Instead, the Indian policy makers allowed the Indian Rupee to appreciate in value then. Its policy makers even blamed China for building an idle huge trillion dollar foreign exchange reserve and following cheap money, credit and exchange rate policy.

Now, India is in a fire fighting mode of arresting the fall of the Indian Rupee. But Indian policy makers, especially the Reserve Bank Of India, are jacking up the interest rates and sucking away all liquidity to defend the Indian Rupee. Are those measures counter productive in an economy already suffering the slow down mode? Instead, is it better that they try to raise the 'sovereign bond issue' or approach the IMF or its own non resident Indians to bail out India?

China is not in a foreign exchange crisis; but its economy is also slowing down. Prof. Paul Krugman argues that China's investment rate to GDP has reached 70% and there is no increase in consumption much and hence the Chinese economy has been showing all signs of the 'classic diminishing returns'. Is that analysis really true for China? Or because unlike India, China followed a cheap money and credit and exchange rate policy, can now it focus on increasing the consumption standards of the vast majority of the Chinese people now? If it is latter, it will be good for the rest of the world also.