The Indian government responded decisively to an emergent high inflation during an early part of 2025. In order to contain the inflationary forces in the economy which were being driven by the demand, the Reserve Bank of India (RBI) raised the repo rate quite a lot and thereby raised the cost of borrowing.
At the same time fiscal interventions were implemented by the government. It cut excise on basic commodities and raised fertilizer subsidies significantly. Such moves served to directly reduce prices to both the consumer and the producer, reducing the effects of high food and input prices on house-hold necessities and farm production.
The mitigation of the supply-side restrictions was the important part of the strategy. Governments controlled the buffer stock to stabilize cereals through the issuance of wheat and rice. There was increased provision of logistics services and zero tolerance on hoarding which strengthened the supply level of essential commodities across the nation.
Excise duties on fuels were also cut by the government. This initiative brought instantaneous relief in the fact that the expenses of transport are reduced, effectively affecting the prices at various levels of the economy through the cut of input expenditure.
Conclusion:
The response of inflation by the Indian government in the H 1 of 2025 was characterized by a complex model in that the authorities used a broad-based strategy that included aggressive tightening of monetary policy by RBI, selective fiscal stimulus on essentials and the input, and anticipatory management of food staples. Such bullish measures also engaged inflation forces directly by cutting prices and boosting supply directly.
