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Is the Indian economy heading towards stagflation?


 http://economictimes.indiatimes.com/news/economy/indicators/is-the-indian-economy-heading-towards-stagflation/articleshow/21114358.cms?intenttarget=no


KOLKATA: Is India in a stagflationary phase? ChakravarthiRangarajan, the chairman of the Prime Minister's Economic Advisory Council (PMEAC), spilled the beans in February in his paper titled 'Growth and Austerity: The Policy Dilemma'. "It is pertinent to note that stagflationary tendencies have already reared their head in emerging markets, like India, where financial intermediation was never a problem," he wrote, creating quite a flutter.

The paper co-authored with Ashok Sheel was published in ICRA's Money & Finance February issue. But the veteran economist and former Reserve Bank of India (RBI) governor was quick to retract his position, possibly to calm the nerves of Indian policy makers and ruling party bosses at a time when elections are just around the corner. In an interview to rediff.com, he pointed out that the paper did not say India is facing stagflation. "The term used is 'stagflationary tendencies' in developing economies as a whole, including India, to describe a situation where growth below trend and high inflation co-exist," he said in defence.


Unless policymakers diagnose and fix what ails our economy, the country may soon have to live with the pain of stagflation, feel some experts

The term 'stagflation' was first coined by British Conservative Party politician Iain Macleod, according to the Douglas Harper Online Etymology Dictionary. Macleod, as the opposition spokesman on treasury and economic affairs in the House of Commons used this word in 1965 while attacking the government's economic policy for promoting stagnation and inflation. Collins English Dictionary defines stagflation as a situation in which inflation is combined with falling output and employment.
Is the Indian economy heading towards stagflation? Reviewed by sambasivan srinivasan on 6:55:00 PM Rating: 5

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