India's Economy Faces Policy Gridlock Amid Shrinking Fiscal Space

India's economy is in a tricky situation.

While the official numbers show strong growth and low inflation, the reality is more fragile.

The government and the central bank have been taking unusual steps to support the economy, like cutting interest rates and adding lots of money into the system.

However, these steps haven't worked as planned.

Interest rates have gone up, the rupee has weakened, and there's not enough money in the system.

This is making it harder for the government to make decisions and could be pushing out private investments.

The report says the government is stuck between wanting to support the economy and not having enough room to do so.