Which one of the following governmental steps has proved relatively effective in controlling the double-digit rate of inflation in the Indian economy during recent years ?

Among the options, containing budgetary deficits and unproductive expenditure (fiscal consolidation) has been relatively effective in bringing down double‑digit inflation. Fiscal restraint reduces the need for monetary financing, lowers aggregate demand pressures and helps anchor inflationary expectations; these effects, together with complementary monetary policy, have been highlighted as key in restoring macroeconomic stability and moderating inflation in India’s recent policy assessments [2]. Official reviews (Economic/Mid‑Year Analyses) attribute falling inflation and improved price stability to consolidated public finances, adherence to fiscal rules and reduction in unproductive outlays, which limited demand‑side inflationary impulses and supported broader price stability efforts [2].

Sources

1. [1] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 4: Inflation > INFLATION > p. 61