"Nov. 1 (Bloomberg) -- India's central bank unexpectedly cut interest rates for the second time in two weeks and reduced the amount of money lenders must hold in reserve in a bid to protect the economy from the global slowdown."
I understand that money is getting sucked out of the Indian financial markets at alarming rates, but lowering the reserve requirements for lenders at any time is extremely risky. Doing it at a time when most economies are slipping into a recession, maybe a deep one and banks are failing globally like they are in a race to get there may be suicidal.
I'm not sure whether the Indian government here is trying to avoid a recession or prevent a depression, but the fact of the matter is that the penalty will be large if they're wrong. If lots of loans fail, good banks are going to get hurt, especially if loan reserve requirements are lower.