Inflation in Indian economy has been very high for long time and this is challenging for the economy as it is eroding the value of Indian rupee in national as well as international market and making life difficult for wages earners. Also considering the social and political unrest in Iraq and other West Asian nations, the problem of high inflation in Indian economy becomes more acute as oil prices would show upward trend leading to higher food and overall inflation in the economy. Government is required to take fiscal initiatives to contain as only monetary policy cannot help government in this regards. From the above graph it is clear that the average inflation during 2012 – 2014 has been around 10% and this is very high for any economy.
Food inflation in the economy is on higher side and government needs to take initiatives for agriculture sector for better results in medium to long term as no short term strategy would work for because there has huge difference in Indian society of early 2000s and today’s India. India is witnessing tectonic shift in its eating habits across the country either its metro cities or rural areas. This has resulted in changes in demand for agricultural foods but most of farmers are following and cultivating old ways and corps. Government needs to bring the required change in the overall farming sector by promoting some important and vital corps so that it does not have to depend on imports.