Inflation and Equity Returns

K V S S Narayana Rao L M Bhole This article examines the impact of inflation in India on the rate of return on equity. The real rate of return for each year and all multi-year holding periods between 1933 and 1987 are presented. Whereas equities provide a positive real rate of return over long periods, it is negative in the short run, especially in years of extraordinary inflation.