The Reserve Bank of India, RBI has tightened monetary policy across the board in an effort to control inflation running out of control. the Repo rate, at which banks borrow from the RBI, has been increased from 5 to 5.25% while the Cash Reserve Ratio, CRR, which is the amount of capital banks must hold in reserve, has been increased from 5.75 to 6%. The increase in CRR is meant to suck liquidity out of the system and in turn will increase cost of borrowing for personal as well as commercial reasons. The RBI is predicting a growth rate of 8% and an annual inflation rate of 5.5% at the end of current fiscal that is March 2011. Whether the RBI is successful in achieving such a high rate of growth while taming inflation remains to be seen but it will need an awful lot of ingenuity. More than 50% of the Indian economy is in black wherein transactions take place in cash and no tax is paid. The biggest sector of the black economy is in property where more than half the price of any property is paid in cash. The reason is the extortionate taxes levied on property, from registration charges to stamp paper. Property dealers charge 2% in cash from both buyers and sellers and thus have an interest in elevating property prices. Naturally property is very attractive to criminals, politicians and uncivil servants to hide money from criminal activities. Thus politicians absolutely do not want property prices to fall because this will wipe out their stolen wealth. At the same time inflation makes people angry, especially the great unwashed, who will vote them out and thus take away the chance to loot. The much derided ' Hindu ' rate of growth of 2.5% may be the only option.