As India's economy grows, its biggest problem has been inflation. And in the last couple of months, that's affected growth with various industrial sectors slowing down.

The Indian index of industrial production has fallen down to 3 per cent from 9 percent, its inflation is at 9.7 per cent threatening to reach 10 per cent and interest rates are making industries push back their expansion plans. It’s a trouble that could happen to any fast emerging economy but it also holds lesson.

India's economic problems hold a lesson for almost all emerging economies around the world. The problem of inflation started in India as just being worrisome but now it has reached a level where its plaguing the economy and threatening its economic growth.

In India, 11 interest-rate increases in 18 months have taken the steam out of the world's 10th-largest economy. Business confidence is falling and growth has slowed down in the last five quarters in a row. But the increase in interest rates hasn’t reduced the inflation rate. And that has finally got the government worried.

Pranab Mukherjee, Indian Finance Minister, said, "Particularly the lengthening shadow of the Euro Zone crisis all over the markets in the world is a matter of concern but at the same time we cannot lose our nerves. We shall have to work collectively"

Experts say India’s inflation problem is not because of high international commodity prices, rising fuel prices or bad harvest. They blame it on bad macro economics.

Paranjoy Guha Thakurta, an economist, said, "What happened to all the early warning systems. Why do we suddenly see a spike in onion prices, in tomato prices. Why did we see a sudden rise in sugar prices. Why haven't we been able to manage the way we export and import. What happens when a government cannot anticipate the increase in agricultural production. That to me is not just an economic policy disaster, its politically pretty disastrous for this government"

India was looking at a 10 per cent growth but now is the country is growing just below 8 per cent. Internationally the figure still might look impressive, but its too slow for a country that needs rapid job creation and poverty reduction.

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