Rajan, Gopinath say India at risk if govt abandons macro-economic stability

To achieve macroeconomic stability, the nation needs to maintain low and stable inflation, Rajan and Gopinath prescribed in a report

India, one of the world’s fastest-growing major economies, risks being pushed into a crisis if the government sacrifices macro-economic stability for growth, according to economists including International Monetary Fund Chief Economist Gita Gopinath and the nation’s former central bank governor Raghuram Rajan.

To achieve macroeconomic stability, the nation needs to maintain low and stable inflation, ensure combined government budget deficit leaves room for private investment and keep a check on external-financing requirement to reduce vulnerabilities, they prescribed in a report, An Economic Strategy for India, released in New Delhi Friday.

Key Insights

This simply means India, a predominantly domestic consumption-driven economy, needs a