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Chief Economic Adviser (CEA) V Anantha Nageswaran has ruled out the risk of stagflation for India, saying the economy is better placed than other nations. Stagflation is the phase when an economy faces moderation in GDP growth as well as high inflation. He stated that ‘Compared to the experience of many developed and developing countries, India is somewhat better placed and more importantly both central bank and the government are seized of the problem under addressing them. I would at this stage say that stagflationary risks for India are quite low compared to the rest of the world.’

The Indian economy grew at its slowest pace in a year during January-March at 4.1 per cent, pulling down the GDP growth in the full fiscal 2021-22 to 8.7 per cent. On the sequential low growth, Nageswaran said it is because of the Omicron wave that the nation experienced in January. He pointed out considering the fears and concerns expressed by many, the year-on-year growth rate at 4.1 per cent indicating that the momentum is intact and if you look at April numbers on GST, etc, there is considerable momentum in economic activity.

Besides, he ruled out recession hitting India, given its macroeconomic fundamentals. Stressing that the domestic financial sector is in better shape to support growth, he said as recovery gathers momentum, private sector investment would also pick up. India is better placed than others to weather the storm and consolidate the growth story that has built in quite nicely over 2021-22, he said, adding comfortable foreign exchange reserves also act as a cushion again external shocks.