Ram Singh Assures No Stagflation Risk Amid Strong Economic Fundamentals
No risk of stagflation, underlying economic fundamentals strong: Ram Singh
Business Standard
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Ram Singh, an external member of the Reserve Bank of India’s Monetary Policy Committee, emphasizes that there is no risk of stagflation in India, citing strong economic fundamentals. He advocates for a dovish pause in monetary policy to support growth amidst ongoing supply disruptions and geopolitical uncertainties.
- 01Ram Singh asserts there is no risk of stagflation in India despite rising crude oil prices.
- 02He supports a dovish pause in monetary policy to mitigate growth sacrifices due to supply shocks.
- 03India's CPI inflation is projected at 4.6% for FY27, with expectations of moderation after Q3.
- 04Private investment grew by approximately 41% in FY26, indicating strong economic fundamentals.
- 05The resolution of the West Asia conflict could significantly influence India's growth trajectory.
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Ram Singh, a member of the Reserve Bank of India’s Monetary Policy Committee, stated there is no risk of stagflation, highlighting the resilience of the Indian economy. He noted that while supply disruptions persist, a dovish pause in monetary policy is necessary to support growth without exacerbating inflation. Current forecasts predict a 4.6% Consumer Price Index (CPI) inflation for the financial year 2026-27, peaking in the third quarter before moderating. Singh pointed out that private investment surged by approximately 41% in the last financial year, reflecting robust economic fundamentals. He emphasized that the geopolitical situation, particularly the West Asia conflict, could impact growth rates significantly. If resolved, India could achieve growth rates of 6.5% or more. Singh also discussed the importance of managing inflation expectations and the interconnectedness of exchange rates and inflation, particularly in light of rising crude oil prices, which have crossed $100 per barrel. He affirmed that the Reserve Bank's introduction of core inflation forecasts enhances policy transparency, helping to navigate the complexities of supply-side shocks.
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The dovish pause in monetary policy aims to support micro, small, and medium enterprises (MSMEs) facing supply shocks, helping to stabilize income and demand among middle-income groups.
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