ABSTRACT
Each of the two preceding chapters is devoted mainly to one of the two essential aspects of any monetization process, namely the political legitimacy and the economic stability involved in any such process. The 1980s appeared to be marked on the one hand by the political crisis of a poor democracy and on the other hand by the attempt to combat the symptoms of repressed inflation. The repression of an inflation process can be explained with reference to the problems of legitimacy facing India’s governments in that macroeconomic or monetary stabilization can scarcely be made to conform with the objective of providing at the same time for dynamic economic development and social equalization. To this extent, the repressed inflation results from India’s dilemma as a poor democracy. It has, however, for its part heightened the pressure of legitimacy in that its inhibitory effects on income generation have diminished the existing latitude for redistribution.
