Abstract
Ever since the liberalization, globalization process was adopted by the countries, especially the emerging economies such as India, achieved the rapid growth in terms of their GDP. However, the major challenge for the monetary authorities is to keep the inflation at moderate levels. Few attempts were made to suggest the threshold level of inflation for the sustainable growth of an economy in India. In this study an attempt has been made to establish the relationship between GDP and inflation also to find the threshold level of inflation by using the annual data for the period 1971 to 2012. The results of this study show that the threshold level of inflation is 6.5per cent for sustainable growth of Indian economy.
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