Inflation in India is a missed vision. The economic theory in western countries are within the reach of government. If same para meter is applied in developing economy such as India is totally one has missed vision. A parallel economy in advanced countries cannot exist . But developing economy such India the system itself generates parrallel economy.
Hence one has to develop different system for such economy.We have to live with 8-9% inflation which has main component cost from hydro carbon till solar and wind power replaces this source of energy.. RBI has tightened the monetary policy eight times in the past one year by about 200 basis points. Excessive tightening can act as deterrent to investment . If investment is low, it will lead to lower production which may in turn cause inflation in long run. To tame the inflation there should be structural changes such as strengthening the supply chain, boost agricultural production, developing a robust distribution net work,, moping up the money in rural area which is liquid cash due to real estate, bring legal transaction cheaper enabling the black money and surplus money brought into the measurable system, enhancing the Human resource development by focusing skill development to needed employability and by strengthening State administration syncronised with these objectives.
