NEW DELHI: Finance Minister Nirmala Sitharaman on Friday refused to comment on 'stagflation', saying "I have heard of the narrative going on and I have no comments to make."
When asked if the Indian economy is entering into a stage of 'stagflation', the Finance Minister said, "I am not willing to discuss as to where the economy stands. I am interested in working towards improving things."
Several economists have expressed concerns after the official data on Thursday showed that retail inflation soared to 5.54 per cent in November, a steep rise of 92 basis points from the inflation number of the previous month.
Stagflation, a combination of slow economic growth with rising inflation, is a phenomenon feared by several economists. Former Prime Minister Manmohan Singh had earlier said that India must watch out for increased risks of such an event occurring.
N.R. Bhanumurthy, Professor at National Institute of Public Finance and Policy, told IANS: "There appears to be a textbook case of stagflation, but the current rise is primarily owing to rise in food prices."
However, former Chief Statistician Pronab Sen said: "The recent rise in CPI figures is a short-term trend and I would not call it stagflation yet."
Sen highlighted the fact that core prices are still going down. "If you take away agriculture, it looks a deflation. I would be concerned if the rising food prices begin to spill over other sectors."
D.K Joshi, Chief Economist, Crisil, told IANS that CPI numbers were not entirely unexpected.
"If you go to the market, you will realise that vegetable prices are indeed very high... That is the chief reason for the spike in inflation," Joshi said.
GST rate hikes:
Ahead of the crucial meeting of the GST Council, Finance Minister Nirmala Sitharaman said the buzz of an increase in GST rates is everywhere other than her office.
She was responding to a question on talk of current Goods and Services Tax (GST) rates of 5, 12, 18 and 28 per cent being raised to make up for the fall in revenues that has even hampered giving compensation to states for loss of revenue from implementation of the indirect tax regime.
"Buzz is everywhere other than my office," she remarked.
Sitharaman, however, did not rule out a hike in GST rates, saying her ministry is yet to apply its mind to it.
(With inputs from PTI)