Rising import costs (particularly food inflation) are nearly impossible to control when the currency weakens this much.

Credit Suisse: With India looking rather stagflationary at present, the Reserve Bank of India faces somewhat of a dilemma. Does it ease policy further on the basis that economic growth is very weak and core inflation soft or keep rates unchanged as it worries about headline inflationary pressures?

The Reserve Bank of India (RBI) will likely cut rates again, simply because the core inflation remains relatively tame (core inflation as measured by RBI actually declined 0.1% due to a slowdown in manufacturing demand). But the outlook for growth is far from certain. With currency weakening, inflation could become difficult to control while growth is showing signs of slowing. These are the signs of stagflation.

via Sober Look: India facing stagflation.