A study of stagflation risks to corporate profits in the Indian economy

Abstract

Examining the GDP and Inflation trends over the last decade show a period of high inflation rates and moderating GDP growth for India during 2010-12. Analysis of the performance of the private corporate businesses over this period reinforces the effects of the trends seen in the macroeconomic indicators (GDP and WPI). While revenue growth was seen to be moderating during this period, net profits and operating profits shrunk noticeably owing to rising costs of raw materials and labor. The trends observed by both (macroeconomic indicators and corporate performance) indicate stagflation in the Indian economy.