Is inflation good for the government and private sector?

Why is it that after a sustained period of inflation, the corporate sector witnesses healthy growth in profitability?
Rising Inflation in India is a boon to the corporate(s), whereby their roll over loans or term loans is getting an advantage. As with rising inflation, more than the levels in which they took loan at, the value of their debts is reducing, while they are earning more on the assets created through the loans.
To simplify the above mentioned statement, few restructured loans at a higher interest rates, would fetch more benefits than they would enjoy by leveraging in the current situation.
The fact that rupee in 2008 would fetch lower in 2010 if the inflation is showing an upward trend, similarly a loan taken in 2008 would be worth less value in 2010 as compared to the revenue being generated from it. Hence, what the company has to pay for in the current scenario is less than what it had to had the inflation been constant.
So, if I say that rising inflation is helping the government I am not totally wrong. Here are the reasons:
1)The middle class or the serviced professionals are already paying direct taxes.
2)With high inflation, the prices of goods and services rise and so does the profitability of the private industry.
3)The reduced value of corporate loans due to depreciating value of INR is helping private industry improve their profitability.
4)Increased profitability leads to increased taxes from the private industry. One might contest that the value of raw materials rises, however that particular value is passed on the consumers, as can be seen from the fact that prices of Cars, Refrigerators, etc. are rising with the rise in input costs.

Hence, both the government and the corporate sector stand benefited from Inflation. It is not only the private sector, but every debtor who has borrowed INR stands to gain (I am not including the consumable debt for depreciating assets like car loans and personal loans unless any monetary benefit is derived out of it). Therefore, even if the debtor targets at defaulting or paying higher interim interest on the borrowed money, in the short term they will stand to gain. Whereas on the other hand, the creditors who have lent out their money stand to lose.
The biggest borrower is the corporate sector in India and of course with fueling inflation they stand to gain at this point in time, whereby they have to pay less for what they borrowed, however they earn more from their investment off borrowings.
Whereas the banks are losing out with their loans stuck. It’s a catch 22 situation for them, as not only their value of loans is depreciating, but also the government might tighten the monetary condition, thereby tightening the supply of credit and hence leaving the banks with further pressure on their bottom-line. Nevertheless, this will lead to strengthening of rupee; hence this is the right time when the corporate sector should be looking towards paying off their loans.
What I fail to understand is that what if the government or few vested bodies are keeping inflation artificially high?, so that the effect of their borrowings impacting their investments (read Real Estate) reduced and the demand for it kept artificially high thereby fetching them good prices. With the Pound Sterling and Euro on the brink of collapse, investors will run for safer havens for investments with India on the top of the list due to rising concerns over Chinese asset bubble. This might further appreciate the rupee in turn adding fuel to fire (read inflation). The government, at this point cannot contract the supply due to numerous political and economic reasons. The rupee is set to appreciate further, thereby making export of its services more expensive. But at the same time giving the cash rich companies more leverage to go in for cross border acquisition.

Though the stimulus package of Indian government was minuscule as compared to that of the US or UK in the current scenario, then what is the reason for such high inflation? Either, we don’t have the capacity to absorb the amount of capital inflow due to which the money is getting channeled to same asset classes and thereby making it over valued. Or it’s the government, which is keeping inflation artificially higher to reduce the debt exposure and discourage the common man to leverage his/her position further, till the worldwide crisis does not mellow down. This is a common methodology being followed since ages to cool down the economy.
The suffering here is of the Middle class. Its an irony; an economy like India boasts of its burgeoning middle class and attracts Investors, however, when it comes to taking care of its interests - all is lost.
Though the inflation has risen and the value of debt to be repaid by the private sector reduced as their value of debt is reducing, while the prices of goods or services they sell are swelling. However, in the past two years, given the worldwide crisis the private sector refused to increase the income of the middle class or people in the service sector to increase their provisions to cover the bizarre era of losses. Hence, though our income has not increased, but the value to maintain our lifestyles has. Therefore, we are the one’s cushioning the private sector and minimizing their losses. But nevertheless we cannot reduce the losses we bear in our real incomes.
The value of Real estate is rising on speculation. The government and banks are getting fooled by the ghost buyers on the real estate developers’ properties, thereby funding them further. The crude is at $75 a barrel as I write this article, however, still we’ll see negligible effect on the Inflation figures, while the government claims crude to be the deterring factor for rising inflation.

Are we caught in the vicious circle of a government and private sector lobby wherein we are far from reforms, wherein though each government plays cards of development and piles up its vote bank, while at the same time leaves the common man wondering - What am I doing wrong?