ARVIND SUBRAMANIAN, fellow at the Peterson Institute for International Economics reviews the high inflation figures for India and conjectures that the combination of serious microeconomic distortions afflicting the land market coupled with macroeconomic factors such as surging capital inflows into real estate and housing could be raising cost of production in the Indian economy as a whole, pushing up cost-push inflation and making the goal of double-digit growth elusive. In an op-ed in The Business Standard, "India's Inflation Puzzle", he states that inflation in India could be far more dependent on services and land as an input and India would need to address microeconomic distortions through structural reforms of the land market and address macroeconomic aggravators of inflation through dampening of foreign capital flows into real estate and housing and higher provisioning for real-estate lending.
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