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RBI article on the state of the economy has said that India is better placed than many competing countries to avoid the risks of a potential stagflation amid an increasingly hostile external environment. It noted that global economic conditions continue to deteriorate as ratcheting up of commodity prices and financial market volatility have led to heightened uncertainty. It stated that stagflation is the combination of slow economic growth along with high unemployment and high inflation.

The article said with most constituents of GDP surpassing pre-pandemic levels, domestic economic activity is gaining strength and the inflation print for May has brought some relief as it recorded a decline after seven months of continuous rise. With a growth rate of 8.7 per cent in 2021-22, India's gross domestic product (GDP) surpassed its pre-pandemic (2019-20) level by 1.5 per cent and the recovery remains robust in 2022-23 so far.

It further said 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. It added that the recent actions by the Reserve Bank which demonstrated its commitment to price stability while supporting growth augurs well in this milieu. However, the central bank added that the opinions expressed in the article are those of the authors and do not necessarily represent the views of the Reserve Bank of India (RBI).