Risk of stagflation in India does not exist: RBI governor

MUMBAI: There are no risks of stagflation in India, Reserve Bank of India (RBI) Governor Shaktikanta Das said on Monday, adding inflation was expected to moderate going forward despite “unimaginably uncertain” global crude oil prices.

“In our assessment such (stagflation risk) prospects don’t exist,” Das said at a meeting of the Confederation of Indian Industry. “India is far away from such a grim prospect.”

The recent geopolitical tensions in Ukraine and Russia have sent oil prices spiralling and raised concerns of a hit to India’s economic recovery.

Last month, the RBI’s monetary policy committee maintained its accommodative stance and kept the key lending rate at record lows to help the economy recover from the pits of the pandemic even as inflation has inched up.

“The point is if you start initiating a premature demand compression through monetary policy action, then it would be counterproductive,” Das said, adding the RBI was supportive of growth.

The central bank said in a bulletin last week the unfolding global developments pose downside risks in terms of spillover from the Federal Reserve’s rate hikes to global markets.

Das, however, said on Monday India was “comfortably placed” to deal with any spillovers and there was “reasonable confidence” the RBI will be able to maintain stability of the rupee.