Sector Wise Differential Growth Rate of Indian Economy and the Threat of Inflation

India experienced a high GDP growth rate over the last two decades. The country is now recognized as one of the fastest growing economy in the world. But the differential growth rate of three sectors namely primary, secondary and tertiary is remarkable. Particularly, the growth rate of the primary sector is very low as compared to other two sectors.

The high growth rate of tertiary and secondary sectors creates rapid increase of demand for agricultural goods. Due to the slow growth rate of agricultural production, a considerable excess demand persists in food market. A high inflation generated from the food market is the present threat of Indian economy.

In this background, this study is an attempt to explain how the differential growth of the three sectors mainly the low growth of primary sector is responsible behind the present high inflation in India. This paper also suggested some policies to control this inflation.