The increasing generalisation of inflation indicated that the supply shocks had morphed into a more generalised inflation process. Conclusions First, inflation in India has remained elevated and persistent over 18 months now. The inflation path was influenced by a number of domestic and international supply shocks. Monsoon failure in 2009–10 and sharp increase in international fuel and commodities prices accentuated domestic inflationary pressures.
For this reason, our economists are still fundamentally standing by their forecast from last December. However, as the future course of the pandemic is still fraught with uncertainty, so too is the outlook for the economy. Our forecast was therefore accompanied by alternative scenarios.