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    Question

    Which of the following issues are the reasons behind

    the inflation in Indian Economy?
    A Supply side issues Correct Answer Incorrect Answer
    B Inefficiencies inherent in production Correct Answer Incorrect Answer
    C Lack of post-harvest infrastructure Correct Answer Incorrect Answer
    D All of the Above Correct Answer Incorrect Answer

    Solution

    Inflation in the Indian economy is due to supply side issues and the inefficiencies inherent in production and distribution. For example, · Lack of efficient supply and distribution network for agriculturalcommodities · Lack of post-harvest infrastructure and facilities like cold storage, cold chain, refrigerated van etc. which help in reducing post-harvestwastage · Price differential between farm gate and consumer due to unorganized retailsector This means that policy should not be focused on aggregate demand, but rather on overcoming capacity constraints and productivity deficiencies.

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