According to an RBI article on the condition of the economy, India is better positioned than many other nations to escape the hazards of potential stagflation, with recovery on track despite an increasingly hostile external environment.
The article, which appeared in the RBI's June bulletin, stated that global economic circumstances are worsening as commodity prices rise and financial market volatility rises, resulting in increased uncertainty. "In the face of an increasingly hostile global environment, India is best placed than many other nations in terms of avoiding the risks of stagflation," wrote a team led by RBI Deputy Governor Michael Debabrata Patra in the article.
Stagflation is defined as a condition in which both inflation and unemployment are high, yet demand remains unchanged in the economy. Domestic economic activity is gaining strength, with most GDP elements reaching pre-pandemic levels, according to the report, which also noted that the inflation print for May provided some respite, since it showed a fall after seven months of uninterrupted rise.
The Reserve Bank of India, on the other hand, stated that the ideas expressed in the essay are those of the writers and do not necessarily reflect the views of the RBI. India's gross domestic product (GDP) surpassed its pre-pandemic (2019-20) level by 1.5 percent in 2021-22, and the recovery has been strong so far in 2022-23, according to the report.
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