On June 1st, Morgan Stanley first reported about India's Stagflation. RBI Governor Dr. Subbarao seconded it during his monetary policy speech on June 17th. Quickly Moody's have also come out and said,
India’s economy is currently following the same downward trajectory, but we do not expect the same lift in the second half. The global
downturn has exposed India's structural faultlines–weak growth, elevated inflation, and political and policy stagnation–and caused a crisis of
confidence. The rupee has fallen, and businesses and investors are beginning to rethink India's long‐term prospects.
India's GDP is expected to grow 6% in 2012 and only slightly better in 2013. That is respectable but below India's growth potential of around
7% and nowhere near the double‐digit pace that policymakers were aiming for just a couple of years ago.
Reform has stopped and businesses have lost confidence, and the picture is unlikely to change between now and the 2014 electionStagFlation is Stagnant Economy and High Inflation.
