Public system stabilises wild swings in food prices, but leaving it to market will be politically costly

Stabilisation measures are taken to control excess demand mainly through high policy rate, austerity drive

Balancing formal sector growth, luxury consumption in a dualistic economy

Since poor have high propensity to consume, regressive taxes reduce their level of consumption

Mass-producing industrial sector gets squeezed in presence of bottlenecks in agriculture

If income of growers doesn't improve, consumer goods industry will either stagnate or contract

Capital flows increase volatility in financial markets that doesn't bode well for govt, business

Capital inflows are temporary as foreign investors invest, withdraw funds swiftly to realize profits

Stabilisation measures reduce inflation, but increase real exchange rate

Real investment falls as large chunk of industrialists pour capital into financial assets