With reference to inflation in India, which of the following statements is correct?

1. A

   Controlling the inflation in India is the responsibility of the Government of India only

   Inflation control in India is not the Government’s job alone; the Reserve Bank’s monetary policy is central, especially for demand-side inflation. This option is not the key.

2. B

   The Reserve Bank of India has no role in controlling the inflation

   The claim that RBI has no role is false; liquidity, policy rates and expectations are RBI tools against inflation. This option is therefore wrong.

3. C

   Decreased money circulation helps in controlling the inflation

   Other things equal, reducing money circulation (tighter monetary conditions) damps demand and helps control inflation. That quantity-theory logic is what the question endorses. This option is the official key.

4. D

   Increased money circulation helps in controlling the inflation

   Increased money circulation, if not matched by output, raises prices. It does not control inflation. This option is not the key.

Summary. Official key is (c) Decreased money circulation helps in controlling the inflation. Tight money reduces spending power and inflationary pressure. The Government is not the sole controller, and RBI is not a bystander. Expanding money supply is the opposite of disinflation. Only (c) is the correct statement.