India better placed to avoid stagflation risk, says RBI report

Even as stagflation risks loom over some of the major global economies, including the US, India is better placed to avoid such a risk, the Reserve Bank of India (RBI) says in its monthly ‘State of the Economy’ report, released.

“In the midst of this increasingly hostile external environment, India is better placed than many other countries in terms of avoiding the risks of a potential stagflation,” the report says.

At least 83 per cent of fund managers surveyed by Bank of America Research this month see the global economy facing the risk of stagflation – the phenomenon of rising inflation and slowing economic growth.

But the RBI report paints an encouraging picture of economic activity gaining strength, with most gross domestic product (GDP) constituents exceeding their pre-pandemic levels. “The recovery remained broadly on track. This demonstrates the resilience of the economy in the face of multiple shocks and the innate strength of macro fundamentals as India strives to regain a sustainable high-growth trajectory,” the report says.