While the world is looking at a distinct possibility of widespread stagflation, India is at a low risk of that, the ministry of finance said in a report on Monday adding that growth momentum is particularly high for investment and exports are leading the pack on the demand side.
It, however, expressed concern on rising commodity prices and supply bottlenecks due to Russia-Ukraine war that could slow down India's economic growth too.
The ministry's optimism on staving off a stagflation stemmed from the fact that along with other indicators, the government's capital expenditure incurred for the financial year 2021-22 has been a whopping Rs 5.9 lakh crore, about 98.5 per cent of the revised estimates of the Centre. Capital expenditure is a barometre of economic development of a country.
It has said that despite elevated inflationary pressures in the economy, it will not trim its capital expenditure plans and will continue to build productive capacity for the long run.
India's consumer price inflation surged to an eight-year high of 7.8 per cent in April.
On investment side, the data from Centre for Monitoring Indian Economy (CMIE) showed that new investment proposals in the January-March quarter of this year witnessed a significant uptick to Rs 5.1 lakh crore from Rs 3.5 lakh crore in the previous quarter.
The ministry said the recent 50 basis point repo rate hike by the Reserve Bank of India taking the repo rate to 4.9 per cent and counteractive policy action by the government in the form of excise duty cuts, rationalisation of custom duties, enhanced subsidy to targeted sections and trade policy changes are expected to restrain inflation while underpinning economic growth in the ongoing fiscal year.
(Published 20 June 2022, 16:29 IST)
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