it is totally depend on the mentality of the people because 
if inflation is high,result is that price is high of the 
commedities so people think about the future so they start 
to invest thier money and save expenses. Result is that 
lack of the liquidity in market and if there is no proper 
liquidation in market recession is high.

When the inflation is high, prices go up and money value is 
depreciated.  What paid earlier for which you have to pay 
more for getting the commodities.  Purchasing power of 
people is coming down, which in turn reduced demand.

Due to reduced demand Industry cannot use its full capacity 
and with less production recession starts.  With onset of 
recession, again liquidity in the market is tightened.  

It is all chain of events.  If liquidity is good, people 
will mind for paying more.  Example is Real estate boom 
which we witnessed earlier.  With high inflation and 
recession, money circulation is reduced and people are not 
able to commit for long term.  

That is the main reason, RBI has injected money into the 
market by reducing the interest rates and also cutting down 
the CRR etc.

Inflation is caused by two reasons :-
1) Demand Pull Inflation
2) Cost Push Inflation

When cost push inflation occurs then the cost of the 
commodoties rised because of the increase in the price of 
the raw materials. 

Due to this the people of the country has to pay more for 
the same commodity than what they were paying. Due to this 
they have to decrease the consumption of the other services 
like hotels, airlines etc. Which causes service industries 
to suffer from the losses because of the low demand of 
their services.

Companies layoff the workers from their jobs because of the 
less demand of their services and even manufacturing 
companies produces less products because of their less 
consumption and the result of this lead to recession.