Inflation growth trade-off - the current Indian scenario

Abstract

India is currently facing the challenge of sustaining a high growth rate along with the need for curbing inflation which is at an all time high. Both the Government and the central bank, RBI, are trying to take measures towards this effect. The important question is whether this inflation is short –term in nature and hence will correct itself, or whether it is more long-term in nature and hence policy measures are required to correct the situation. Against this backdrop, it becomes pertinent to study the factors which have led to this situation in the first place and also the effects of the various measures that could be taken to correct the situation. The study includes both supply side and demand side factors and aims at determining particular periods of anomalous behavior in the relation between inflation, what kind of policy changes were effected at such times, and how these policy changes affected the scenario.