Is India a Low Risk of Stagflation?

Sheetal Khandre

World Economics, 2023, vol. 24, issue 1, 231-274

Abstract: In 2021/22 the world inflation rate increased by 2.7%, potentially due to the Russia–Ukraine war and the pandemic. According to the International Energy Agency, Russia's oil exports might reduce by 2.5 million barrels per day under the existing sanctions, representing around 30% of its current exports and nearly 3% of the world supply (IEA, 2022). This situation has helped drive up the inflation rate and may be pushing the economy towards stagflation. In this article, I examine whether the Indian economy faces the problem of stagflation or high inflation. Time series data are used to evaluate stationarity and ARIMA models to forecast future values. This study proves that crude oil prices, exchange rates, unemployment, inflation and GDP are not stationary. The ARIMA model helps forecast future values to scrutinise the risk of stagflation.

Date: 2023
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