If it wins elections it must be good.

"Any student who has endured even an introductory course in macroeconomics would remember the Philips curve that argues that inflation and growth move together in the same direction," wrote A Barua. Inflation peaked at 11.5% between 2011 and 2013 which is why the government formed a Monetary Policy Committee (MPC) at the Reserve Bank of India which was set a target of 4% plus/minus 2% for consumer price inflation (CPI). Barua blames the RBI "about the inflation paranoia that followed", which apparently resulted in lower growth because wage inflation fell, tax collections, dependent on nominal gdp, also fell and consumer spending fell because of 'poorness illusion'. Inflation is definitely good for the government because it collects more taxes as wages rise and value of its debt falls as the value of money falls. So if inflation is good should we aim for the highest level possible? The inflation rate in Venezuela has reached 10 million percent which should have made it the richest country in the world, but its people are starving. "Most central banks favor an inflation target that is in the region of 2 to 2.5%." "Some economists argue there should be a higher target in times of recession, such as 3%." It is not that rising prices lead to higher growth of the economy but that higher growth leads to inflation because supplies take time to catch up with demand. As for taxes, the government has earned in excess of Rs 11 trillion from taxes on fuel as the international price of crude oil has remained low since 2014. This year's budget further increased excise duty and cess on fuel. If the oil bonanza had been used to refinance banks, which are still holding bad loans of over Rs 9 trillion, it would have increased lending, regardless of the rate of interest. The problems of the economy are self-inflicted, wrote Puja Mehra. The informal economy, which employs over 80% of workers, has not recovered from demonetization in 2016. Small businesses are unable to comply with an excessively complicated goods and services tax (GST). Consumption has fallen so much that growth in fast moving consumer goods (FMCG), which are articles of daily use, has also slowed. "Between 2011-12 and 2017-18, earnings of regular workers declined in both rural and urban areas. Rural regular wages declined by 0.3% per annum, while urban regular wages declined by 1.7%," wrote Prof Himanshu. Restrictive policies on agriculture, to keep food prices under control, have acted as 'implicit taxation' on farmers, wrote Prof A Gulati. "If one calculates the sum involved in this 'implicit taxation', it amounts to Rs 2.65 trillion (lakh crore per annum, at 2017-18 prices, for 2000-01 to 2016-17. Cumulatively for 17 years, this comes to roughly Rs 45 trillion at 2017-18 prices." "Given the fact that the poor spend a much larger portion of their incomes on food, they are extremely vulnerable to food inflation," wrote R Kishore. That is why they are not much affected by falling GDP growth. Which is why Modi won re-election with a huge majority. That, after all, is what matters.