ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Current Inflation in India

Dangers of a Misdiagnosis

Following the standard percepts for dealing with supply shocks, monetary policy continued to be easy for an extended period, while simultaneously huge fiscal stimuli were applied. Even when a more restrictive monetary stance was taken, the measures were not strong enough to restrain inflationary expectations. A soft monetary policy with a sizeable fiscal deficit can harden inflationary expectations and a perpetuation of a new higher normal for inflation.

Inflation has always been an important policy concern throughout the world and especially so in the developing world. Since 1960, India has experienced several bouts of inflation1 some fairly moderate, others alarmingly high. These inflationary episodes (inflation exceeding 5%) may be chronologically listed as (the sub-periods in the parentheses refer to years in which inflation soared over the 10% mark):

(i) 1964–67 (1965–67)

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Updated On : 2nd May, 2023
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