Economic fluctuations and inflation: An Indian scenario

Inflation is characterized by an increase in the general level of prices for goods and services. Inflation lowers the rate of savings and diminishes the purchasing power. The main cause behind inflation is the increase of money supply than the demand for money. The supply of money per unit of output increases, when “velocity” of money circulation increases. Further the relation of inflation being inherent with economic growth was strengthened; as the economy was booming with high economic growth rate so was the inflationary pressure or vice versa as we experienced during economic melt down. In this paper attempt has been made to bring forward the impact of Inflation on the Indian economy in the current scenario of global recession that is no doubt showing some recovery and is expected to increase.