India faces slowing growth but low risk of stagflation: Finance Ministry

Country faces near-term challenges in managing fiscal deficit, reining in inflation and containing CAD while maintaining a fair value of the rupee

The Finance Ministry said on Monday that while India faces a lower risk of stagflation than other nations, there is now an upside risk to gross budget deficit due to additional welfare and subsidy spending and recent cuts in excise duties, and the economy faces slowing growth due to global factors.

In its latest Monthly Economic Report (for the month of May), the Finance Ministry stated: “India faces near-term challenges in managing its fiscal deficit, sustaining economic growth, reining in inflation and containing the current account deficit while maintaining a fair value of the Indian currency.”

Many countries, especially the