rbi inflation risk in india is low economic activities will remain strong mdn

Risk of inflation-induced recession low in India

Staff members of the Reserve Bank of India (RBI) said in a study report published that the chances of India getting trapped in stagflation are low. When inflation increases rapidly amidst slowdown in economic growth rate, that situation is called stagflation. A study by Dev Prasad Rath, Silu Muduli and Himani Shekhar said that the risk of inflation-induced recession in India is only one percent. It said that this time the shocks in commodity prices are not very serious. According to this study, in the last three decades, episodes like the Asian crisis (1997-98), the global financial crisis (2008-09) and the Covid-19 pandemic have increased the risk of inflation-induced recession. However, this study does not represent the official views of RBI. According to this, the risk of inflation-induced recession had increased due to the rise in commodity prices and the strengthening of the US dollar during the Covid-19 pandemic. But this risk has reduced due to the financial situation coming under control, the fall of rupee stopping and the prices of petrol and diesel becoming stable at the domestic level.