The RBI-govt rift adds to concerns in already bleeding Indian markets

Relations between the two have deteriorated in recent months, with the government unhappy with the central bank's interest rate policy ahead of an election early next year

In the end, India’s rupee pared losses and stocks surged on Wednesday as the government sought to dampen concerns over its rift with the central bank. The turn in sentiment may prove fleeting as investors remain concerned that the tensions may simmer with a general election approaching.

The discord over the Reserve Bank of India’s autonomy comes at a time when the nation’s assets have been routed by oil prices and a crisis in the shadow banking sector. A global risk aversion has added to the bad news, with foreigners pulling a combined $5 billion from local shares and debt last