Over heating to slow down

6-8 months back the problem encircling the country was Overheating aka Inflation. Indian government found an ultimate solution for that problem. Government increased the CRR (Cash Reserve Ratio), it's the percentage of revenue that every bank has to keep with RBI. Due to low capital in the market interest rates shoot up.So consumers postponed their decisions to purchase and the demand of goods in the market fell down and hence prices came down. This whole drama went for 6 months . It was quite successful also inflation in terms of WPI ( wholesale price Index) went down from 6.6% to 3.5 % and in terms of CPI(Consumer price Index) it went from 7.5 % to 5.5%. But tables have turned now, the fear of overheating has been replaced by fears of slow down. If we see the sectors like transport equipment sector, which is an interest sensitive sector i.e as the interest rate increases demand decreases , demand has been shrinking drastically for 6 months.Why is so happening? Chief reason behind is the increased interest rates in India and recently decreased interest rates by US fed. Due to this discrepancy in interest rates India is attracting a huge capital inflow and further putting pressure on rupee to appreciate. However further appreciation is not politically acceptable. So the ultimate solution this time will be to cut the rates and reduce the pressure on rupee.But what it can again cause inflation? In the normal market the low interest rate can be inflationary but in India where RBI persistently trades in the foreign exchange market buying dollars , so lower interest will help reduce inflation as well as slow down.