Inflation refers to the increase in the prices of goods and services over time. Rising inflation affects the economy of India in the following ways:

• It reduces the purchasing power of money, and thus lowers the standard of living of people on a fixed income.
• Inflation raises the cost of borrowing, which discourages investment. It leads to unemployment as companies fail to hire new employees and reduce existing workforce to mitigate the costs.
• It increases the cost of production and the price of goods, which decreases exports as goods become less competitive in international markets.
• Highest inflation also leads to trade deficits, as the country's imports become more expensive, which further burdens the economy.
• Inflation leads to uncertainty about future prices, which affects the financial decisions of businesses and consumers.
Some of the major causes of inflation in India are rising fuel prices, the devaluation of currency, increased production and transportation costs, and growth in money supply.

Overall, rising inflation negatively impacts the economy and its different sections, such as consumers, businesses, and importers. The government can try to combat inflation using various measures, including managing money supply, encouraging domestic production, and keeping a check on international oil prices.