“Low inflation is not always a sign of healthy demand”. Analyse this paradox in the context of India’s recent inflation figures. Evaluate the potential risks of prolonged disinflation. Suggest comprehensive policy responses to address both demand and supply-side vulnerabilities.

Q7. “Low inflation is not always a sign of healthy demand”. Analyse this paradox in the context of India’s recent inflation figures. Evaluate the potential risks of prolonged disinflation. Suggest comprehensive policy responses to address both demand and supply-side vulnerabilities. (10 M)