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    ISAS Briefs

    Quick analytical responses to occurrences in South Asia

    185 : India’s Inflation: An Alternate Hypothesis

    S. Narayan, Head of Research and Visiting Senior Research Fellow at the ISAS

    11 January 2011

    Inflation continues to remain the biggest challenge for economic policy in India. This paper analyses various factors contributing to inflation. It argues that rapid growth of a cash economy fuelled by heavy liquidity and large cash transactions, particularly in property markets, are sustaining inflation. Under such circumstances, monetary policies are likely to be ineffective in curbing prices.