If the RBI continues to increase the supply of money in the economy to fulfill the increasing demand due to inflation, this inflation would definitely spiral out of control. The inflation would then become hyper inflation, the effects of which on an economy are devastating.

Realizing this fact, Montek admitted that growth would fall this year. Ahluwalia, however, attributed this to international trends. “Growth all around the world is falling because of rising fuel prices and other global factors. India cannot be isolated from that,” he said. On speculation that crude prices may further go up, Ahluwalia said speculations of crude oil prices would lead to nowhere. “There is no point in speculating. Our job is to control inflation and I am confident that we will be able to do that effectively,” he said. Montek, however, sounded optimistic about the future of India, hoping that the average growth for the next five years would hover around nine percent, the target perceived by the government.