No stagflation risk in India, says RBI Governor

Mumbai, March 21

Reserve Bank Governor Shaktikanta Das on Monday said there was no prospect of the economy falling into a stagflation vortex and retail inflation was expected to moderate going forward, notwithstanding fears of imported inflation given the massive spike in commodity prices, especially crude oil, after Russia invaded Ukraine last month.

He was addressing an industry meet organised by CII here this evening.

Comfortably placed

We are comfortably placed to deal with any challenges with regard to financing the current account deficit, and the RBI stands committed to deal with any challenges on this front. —Shaktikanta Das, RBI Governor

Stagflation or recession-inflation is a situation in which prices rise too high but the economy slows or falls into a recession-like situation and also unemployment jumps.

Already retail inflation has risen to 6.07% in February, crossing the upper band of the Parliamentary mandate. This is the second consecutive month in 2022 when retail inflation has crossed the 6%-mark having hit 6.01% in January. The previous high was 6.26% in June 2021.

In a similar manner, the Governor also expects the rupee to remain stable. The rupee has been the worst performer among the emerging market peers since Russia-Ukraine conflict and plunged to a low of 77.27 early this month.

He said the RBI will continue to ensure adequate liquidity to support the economy, which is facing many headwinds in the form of soaring crude oil and key commodity prices following the Russian invasion of Ukraine.

He said since March 2020, the central bank has pumped in a whopping Rs 17 lakh crore into the economy and assured the industry that the RBI will continue to ensure that the economy is well oiled with funds. — PTI

What is stagflation… 

Stagflation is a situation in which prices rise too high but the economy slows or falls into a recession-like situation and also unemployment jumps

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