Why Mr. Rao cannot control inflation in India, unlike other nations do?

c for congress, c for corruption 

Corruption Sirji......thts why inflation cant be packed in a sweet box

True, Mr. Cherian, I endorse your viewpoint.  Thanks very much for your timely rebuttal!

Mr. Murli, you are perfect in all the statements, though two points I would like to expand. 1)GDP deflator is also called tax deflator, which is the change in GDP to change in taxes which works in the opposited direction. When tax is cut, the GDP goes up. I think the formula for it is (MPC/1+MPS) where MPC is the marginal propensity to consume and MPS is marginal propensity to save. This gives the expansion factor of the economy. Now a days targeting the economy like fixing growth rates of economy on a trajectory is achieved with this and controling credit which fixes the inflation rate which can be useful for the required growth rate called 'inflation targetting. The 2) one is Keynsians don't use money as a variable, their tools are budget deficits, interest rates. Taxes are used as above to cut or raise to maintain the defined deficit in budget which happens to stimulate a stagnant economy. Monetarists uses money supply. There is a third school like the Supply side Economists who uses control of outputs to define economic states. It is their dictum that 'supply creates its own demand'. Modern economists borrows from them and use the Aggregate demand and supply to equilibriate for economy to be in balance or steady state. Thanks.

The Indian method for calculating inflation, the Wholesale Price Index, is different from the rest of world. Each week, the wholesale price of a set of 435 goods is calculated by the Indian government. Since these are wholesale prices, the actual prices paid by consumers are far higher.
The inflation rate in India was last reported at 9.3 percent in January of 2011. From 1969 until 2010, the average inflation rate in India was 7.99 percent reaching an historical high of 34.68 percent in September of 1974 and a record low of -11.31 percent in May of 1976. Inflation rate refers to a general rise in prices measured against a standard level of purchasing power. The most well known measures of Inflation are the CPI which measures consumer prices, and the GDP deflator, which measures inflation in the whole of the domestic economy
In mainstream economics, the word “inflation” refers to a general rise in prices measured against a standard level of purchasing power. Previously the term was used to refer to an increase in the money supply, which is now referred to as expansionary monetary policy or monetary inflation. Inflation is measured by comparing two sets of goods at two points in time, and computing the increase in cost not reflected by an increase in quality. There are, therefore, many measures of inflation depending on the specific circumstances. 

The most well known are the CPI which measures consumer prices, and the GDP deflator, which measures inflation in the whole of the domestic economy. The prevailing view in mainstream economics is that inflation is caused by the interaction of the supply of money with output and interest rates. Mainstream economist views can be broadly divided into two camps: the "monetarists" who believe that monetary effects dominate all others in setting the rate of inflation, and the "Keynesians" who believe that the interaction of money, interest and output dominate over other effects

Mathew sir you are very right about the inflation and also said right about hows businesses overcome through with govt wrong decisions, because one side govt create demand and other side they don't do any thing for business houses. They only play with situation and flow a large amount of money in the market to meet the demand.

Vinod Kumar, what I was trying to say was that, value of currency or purchasing power of currency has a direct bearing on the sensitivity or volatility of inflation. When purchasing power is lost, then people who manufacture will have to spend more to get a service than otherwise which will show high movement of the cost needle than countries where purchasing power is high where they need not have to spend more for raising production because of more quantity of service got for less spending. Incremental demands are met with lesser expenses by manufacturers so sensitivity to rising demand on prices is low compared to countries like India where the purchasing power is low and sensitivity to incremental demand on price is high. Thanks.

Vinod Kumar thanks for thinking about, you are right about the effects in someway not wholy.
Inflation is defined as the general rise in price levels. This directly affects a citizens purchasing power which means all his savings will lose its real value. Just because one can afford to pay doesn't mean he is immune to the big consequences of inflation of him loosing all his savings if the problem persists. When the money supply rise it pilfers into everyones lap a little bit and this creates demand which the supply cannot meet. Factories will have to run overtime to meet the new emand created and so the overheads rise and they raise price. Factors of production like land, labor and captial is indivisible and so for raising production they will have to go for full investments in factory facilities, where a partial production only may be needed to meet the marginal demand occured, but at the same time full overheads will occur. This is a source for rising prices from the manufacturers of businessmen as you call them occur.Thanks.

Inflation is it a reality or a mismatch of govt decision???? if see closely it is just a mismatch of govt decisions. because in realty only  prices of consumable items are hit by the govt wrong decisions. we are divided into various service, profession and business groups. and inflation is the mismatch which arises only because of Income earned by these groups. Because in service groups those who are in govt sector always free from such inflation moments. And second are those who earned higher income from private sector they are also not hit by the inflation. and third are middle lower  & lower income group are only facing such problem of inflation. and talking about the professionals they also not much affected by the inflation. And about business group they are the main cause for inflation. because when ever govt takes any decision in favor of people and employees, these businessmen acts oppositely of govt decisions. because govt policy and decision makers are always play with the situation, they only take one sided decision. It is the only reason for the inflation.

There are so many examples, let me enlighten of one recent one, take the Clinton presidency in US, during which there was an unprecedented expansion cycle and the inflation was very low. Coutries like UK, France, even Germany used to have expansionary phases in the last 1/2 century and there was no noticeble inflation there. 
Controling inflation is a deliberate process, requiring meticulous planning of the economy, creating structure and form for its daily existence. Once this symmetry is missing, the economy tend to be chaotic, which is my contention and a Centroal Banker stating the contridictory view seemed to be unprofessional and unprecedented, however qualified he is for the job. It is like a pilot in midair stating he cannot read the altimeter. No central banker of meaningful nations ever stated so, so understand it.

Mr. Kanti, I am not saying that expansion don't create inflation, but the rate at which it happens is due to our weak currency policy and lack of political will in endowing citizen or clear cut objective or structure for the economy. Your assertions seem to convey the message that other countries don't face such expansionary phases and the rate of inflation there in those times are similar?

You need to state the countries you compare Indian economy with. It is essential because India is a fast growing economy today starting from 2003. In course of devlopment so many industries and new companies in the industry have been coming up everyday,. The demand for raw material is going up many fold. Salaries of manpower have gone up many fold. the profitability of companies have gone up equally high. In the market money supply are being added in spite of the control by RBI.The purchasing power consumers which has gone up much higher add to the real woe. Money earned within the nation is being repatriated in mass scale. Demand for subsidies are going up. Oil prices have been quadrupled i since 3003. The import bill has become enormous. In this scenario if there is a failure in agriculture even by small percentage there is heavy pressure on food prices.These combined together make difficult for the government to control prices at will. Government has been trying with all economic tools but did not hit the target squarely.Noe the time has come when the overall inflation rate is showing some sign of relenting and  will come down further very soon. Wait for few days and you will not catch govt. caught napping.

Yes it is controllable in case it is followed in a scientific way. Nothing is impossible in this world and the only thing we have not yet made the endeavor towards controlling the inflation and telling stories & lame excuses.
I accept your points of view Mr.Mathew Cherian JI.