Controlling Inflation-Some Analytical and Empirical Issues

Controlling Inflation Some Analytical and Empirical Issues V Pandit In its perception of the problem of inflation the finance ministry has placed excessive emphasis on the demand- pull factors, overlooking the strong cost-push phenomena that have characterised the Indian economy in recent years. An across the board contractionary fiscal and monetary policy, even if effectively implemented, is not a good substitute for efficient resource utilisation. In fact it may hurt the economy and turn out to be stagnationist, at least in the short run.