Discussion
India has been witnessing high rate of inflation because
Answer: D
Correct answer: All of the above
All three contribute. Continuously rising public expenditure and money supply generate demand-pull inflation, as more money chases the available goods. Inadequate performance by agriculture and industry limits the supply of those goods, so the excess demand meets a constrained supply. And hikes in both market and administered prices - fuel, fertiliser, minimum support prices - feed cost-push inflation directly.
Indian inflation has characteristically combined all three, which is why monetary tightening alone has rarely been sufficient and supply-side measures have been needed alongside it.
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