Value of a nation's money reflects the strength of its government. We tend to measure that strength by what we can see: roads, airports, DPI. But the most consequential work of a strong government is fiscal discipline, credibility to honour its debts, willingness to make hard, unpopular choices, and restraint to resist easy giveaways when a windfall arrives. That commitment protects the currency's value and, with it, savings and wages of ordinary people.
India's inflation between 2010 and 2016 is a case study in this contrast between seen and unseen. The country lived with inflation of 9-11% a year from 2010 to 2013, then watched it fall by half within 2 yrs. The usual explanations - expensive food and then cheap oil - are true as far as they go. But they explain neither timing nor persistence.
