• Ritika

This research investigates the complex interactions between inflation and key macroeconomic indicators in India, employing empirical analysis of data from the 1990s to 2025. The study explores how inflation influences and is influenced by economic growth, interest rates, money supply, unemployment, fiscal deficits, and exchange rates. Findings reveal a nuanced relationship where moderate inflation supports short-term growth, but inflation beyond threshold levels (approximately 3-5.5%) undermines long-term economic performance by raising uncertainty, distorting investment decisions, and reducing competitiveness. The Reserve Bank of India’s monetary policy, particularly interest rate adjustments under the inflation targeting framework, has been effective in moderating inflation and anchoring expectations. Fiscal deficit monetization remains a significant inflation driver, underscoring the need for better fiscal-monetary coordination. The classical Phillips Curve relationship between inflation and unemployment is weak in the Indian context, marked by periods of stagflation and structural labor market challenges. Exchange rate volatility linked to inflation impacts external competitiveness, mitigated by India’s flexible exchange rate regime. The research employs advanced econometric techniques including cointegration, VECM, Granger causality, and threshold regressions to model these interactions. The conclusions emphasize the importance of calibrated monetary policy, fiscal discipline, and structural reforms to sustain price stability alongside robust growth. The trajectory of India’s inflation trends up to 2025, with recent moderation to historically low levels, highlights the success of coordinated policy measures but also the ongoing challenges posed by global shocks and domestic structural factors. This comprehensive analysis provides guidance for policymakers to maintain macroeconomic stability and foster inclusive growth in India’s evolving economic landscape.

macroeconomic indicators

"", International Journal of Emerging Technologies and Innovative Research (www.jetir.org), ISSN:2349-5162, Vol.12, Issue 1, page no.h651-h657, January-2025, Available :http://www.jetir.org/papers/JETIR2501764.pdf

"", International Journal of Emerging Technologies and Innovative Research (www.jetir.org | UGC and issn Approved), ISSN:2349-5162, Vol.12, Issue 1, page no. pph651-h657, January-2025, Available at : http://www.jetir.org/papers/JETIR2501764.pdf