The Reserve Bank of India, on Thursday, said risks of stagflation are rising in the backdrop of the Russia-Ukraine war.
“With no resolution visible in the near future, the need of the hour for every economy is to combat mounting inflation while factoring in the growth requirements of the economy,” said Shaktikanta Das, Governor, RBI, in the Financial Stability Report
The balancing game has become even more delicate, he further noted, adding that central banks need to remain focussed on their perennial responsibility of maintaining financial stability.
The Indian economy is facing significant spillovers from the evolving global conditions, he further noted, but stressed that the innate strength and resilience of our macro fundamentals is catalysing a steady recovery.
“The Indian economy is facing spillovers from global conditions but remains on the path of recovery,” the report said, adding that the financial system remains resilient and supportive of economic revival.
The FSR also highlighted that going forward, preserving macroeconomic and financial stability on a durable basis holds the key to reviving India’s tryst with its longer term growth prospects and developmental aspirations, including its emerging role in the global economy