Income versus inflation

Most analysts, including in RBI, will tell you inflation is India’s biggest problem right now; indeed, RBI Governor Duvvuri Subbarao was on record recently as saying inflation was at a level where it was hurting economic growth. If inflation is allowed to go unchecked, the argument goes, inflationary expectations get embedded into every economic player’s actions, and runaway inflation is the result. No economy, the experts will tell you, has grown in the long run without having inflation under control.

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