High rates to lower demand might also reduce supply...

IMF has recently declared INDIA a hot-spot for global investor and even better among emerging markets due to its equanimity underscored by its reliance on domestic demand for growth, low global commodity price regime because it is mainly an importer, its upcoming rate-cut-cycle, the idea to explore manufacturing and exports possibility with low wages compared to the peers, its high rate of population growth rate, a reservoir of labor and demand, low fiscal and current-account deficit and its pace of expansion and growth, both actual and potential, present best investment and business returns... However, regulations still constrain the ease of doing business... Nevertheless, INDIA has improved alot on competitiveness in a recent rating-report and the government is conscious about problems of doing business, both foreign and domestic... Businesses employ people which is good for demand in the market through multiplier which creates income and tax to improve human-lives... Notwithstanding, the burden of a large number of poor-people, also due to high population  growth-rate and unskilled and unproductive labor-force could not be underestimated... Nonetheless, unprecedented public-spending in a developing economy would increase demand and prices (inflation)... The supply of money either by fiscal or monetary-policy should match or increase availability of goods and services... If the policies only aim at increasing money it would not solve the problem, but might lower demand-supply and growth by increasing inflation and interest-rate... The economy might start de-accelerating... Higher prices keep demand and supply low because interest-rate will increase... The question naturally arises that if inflation is high then why the central-banks restrict supply by increasing interest-rate when they may actually increase supply by cutting rates? Low cost of capital might help improve supply and lower prices... lower cost will also lower prices and inflation... When central-banks try to decrease demand to lower inflation it also lowers supply which puts the economy on a down-path... a contraction... Demand and supply are not independent from each-other rather they are different names to address the same economic-activity... When central-banks try to regulate demand by increasing interest-rate it also decreases supply and thereby worsening inflation... However, zero-lower-bound (of interest-rate) is the limit for interest-rate-cut to increase domestic supply after that foreign supply comes into play which might help to store supply and demand and price-stability, actually lower prices to increase economic-activity and growth-rate... So far economists have attributed high inflation to high money-supply and demand, and, not to the actual supply and demand of goods and services which might be positively correlated with low interest-rates...