Question

Which factor effect on increasing infuletion rate of india?

Answer 1

India has a very large population, creating an ever increasing demand of goods which the supply side can not match up. Repeated hikes in interest rates by RBI has downgraded investment sentiments thus leading to lower production whereas increased government spending in schemes like MNREGA, etc have resulted in an increase in the incomes in Indian households and thereby contributing to higher prices. Higher fiscal expansion (by government) at the same time when monetary controls were introduced has obstructed in achieving the desired anti- inflationary results of the latter