Inflation Targeting and farm loan waiver are two opposite objective but this will only lead to higher inflation and at some point of time stagflation as farm loan waiver does not create any asset with a cashflow by which the debt can be paid. Since bond market is more rational , it is already punishing state development loan ( SDL) yield and crowding out private investment. Equity market is still hoping for this govt spending and free money to be converted into earnings and to some extent it might happen but revenue spending can only take you so far. so what will be standing between an equity market rally and moderating overheating economy will be pace of central bank tightening.