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Policy planners are struggling with the dilemma of the sequencing of the exit strategy from the policy measures, especially with respect to a loose monetary policy.

The dilemma is most acute because, unlike in some of the other economies, the monetary and fiscal measures in India were staggered. This made the task difficult for policy planners to ascertain as to what really worked and what didn’t. In addition, signs of incipient recovery together with an emerging threat of inflation ...