Reflation

noun (uncountable)

/ˌriːˈfleɪʃən/

A fiscal or monetary policy stance aimed at reviving economic activity and prices from a deflationary or recessionary trough, without deliberately generating excessive inflation. Reflationary measures include interest-rate cuts, government spending increases, and tax reductions. India's post-COVID Atmanirbhar Bharat stimulus packages of FY 2020-21, combined with the RBI's 115-basis-point repo-rate cut, constituted a broad reflationary response to reverse the economy's contraction.

✍️ Usage in a UPSC answer

Following the 2020 COVID shock, the Indian government's record capex allocation in Union Budget 2021-22 — rising 35% year-on-year to Rs. 5.54 lakh crore — served as the primary reflationary anchor, as conventional monetary easing alone was insufficient to restart a demand-starved economy.

Synonyms

economic stimulusdemand revivalexpansionary policyfiscal expansiondemand management

Antonyms

deflationdisinflationausteritycontractionary policytightening

🌱 Word Family

reflate (verb), reflationary (adjective), deflation (related noun), inflation (related noun)

🔡 Root

Latin re- = again + flare = to blow; reflation is formed by analogy with 'inflation' = re-inflating after deflation

📜 Etymology

The term was coined in the 1920s and 1930s by economists debating recovery policies during the Great Depression, as a deliberate contrast to both inflation (price rise exceeding potential) and deflation (price decline). It describes the 'Goldilocks' middle path: re-inflating an economy just enough to restore full employment without overshooting. J.M. Keynes implicitly advocated reflationary fiscal policy in 'The General Theory' (1936), and the word gained broader policy currency in discussions of Japan's deflationary trap in the 1990s.

🧠 Memory Hook

RE + FLATION: you RE-inflate a flat tyre that has lost air. Reflation RE-inflates a flat, deflationary economy — pumping just enough air to get it moving again without over-inflating and causing a burst (inflation).

💰 Indian Economy 📖 Seen in: Indian Economy — Growth, Planning & De...

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