India's economy holds shaky crown as risks build

(Sept 3): India’s world-beating economic growth is running up against some big risks: high oil prices, emerging market stress as the era of easy money draws to a close, and policy paralysis in the run-up to next year’s federal election.

Those factors may push the rupee, Asia’s worst performer this year, even lower, as well as dampen some of the optimism that has propelled the local stock market to record highs. They also serve as a reminder to investors that Asia’s third-largest economy, which has overcome the twin shocks of a cash ban and the chaotic introduction of a nationwide consumption tax, is not fully out of the woods yet.

Policy paralysis ahead of elections is also a threat investors will have to factor in. That together with a record low rupee and rising local interest rates could hurt consumption and throttle the recovery. Exports are separately at risk from the global trade war.

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