The Reserve Bank of India (RBI) uses various methods to control inflation in India.

• Interest rate hike: One of the most common methods used by RBI is to increase the interest rates. This makes borrowing expensive, which subsequently decreases the demand for goods and services. Reduced demand results in lower prices and ultimately decreases the inflation rate.
• Open Market Operations (OMO): In this method, RBI buys or sells government securities in the open market to control the liquidity of money supply. If RBI sells securities, it reduces the amount of money supply in the market, leading to decreased inflation.
• Reserve requirements: RBI can increase the reserves that banks are required to hold, thereby reducing the amount of money in the economy which results in lowering inflation.
• Repo rate: By changing the repo rate, RBI influences the money market. Repo rate is the rate at which RBI lends to commercial banks. Increase in repo rates leads to increased cost of credit, thereby decreasing the borrowing capacity of the banks.
• Marginal Standing Facility: This is an emergency liquidity window that provides short-term liquidity to the banks in case of a shortfall. RBI sets the rate of interest on this facility, which impacts the liquidity in the market.

The effectiveness of these measures depends on various factors such as the nature and extent of inflation, market conditions, and overall economic stability. However, these tools have shown to be effective in controlling inflation to a certain extent.