The dreaded ‘s’ word has reared its head again. Random statements, opinion pieces and the blogworld seem obsessed with the word. A fund manager interviewed by this newspaper a few days ago uttered it.

And then the BJP added the same terrifying word to its laundry list of accusations against UPA-II. Finally, the GDP figures released for the fourth quarter of 2011-12 and the entire financial year somehow seem to validate the use of the horrendous ‘s’ word.

The slowing growth figures for 2011-12, combined with the resurgent headline inflation numbers, seem to confirm the worst fears: all visible road signs seem to be pointing towards the realm of stagflation.

In simple terms, stagflation is a condition marked by slowing growth and a state of rising inflation. Going by the current state of the two factors mentioned earlier, are we there yet?

Let’s start with the GDP growth numbers. The recently-released data for the fourth quarter of 2011-12 put the figure at 5.3%, which was much lower than market expectations.

It’s true that everybody expected quarterly numbers to reflect the ongoing slowdown, but 5.3% was way lower than those expectations. The low Q4 data pulled down GDP growth for the entire 2011-12 to 6.5%, which is almost 200 basis points lower than 8.4% recorded in March 2011.

But, this was no flash-in-the-pan slowdown. GDP growth, measured on a year-on-year basis, has been slowing down every consecutive quarter: 9.2%, 8%, 6.7%, 6.1% and 5.3%.

Given the downward-sloping trajectory of quarterly GDP growth numbers, the first condition of stagflation seems to have been somewhat met. Apologists arguing that 5.3% growth, or 6.5% annual growth, rates are higher than those in most countries and, thus, contraindicant of any stagflationary impulses might be missing the point.

The directional movement does seem to indicate slowing growth. In addition, the index for industrial production (IIP) for April posted weak growth at only 0.1% (year-on-year), further confirming fears of a slowdown.

Let’s take a look at the inflation rate now. The wholesale price index, used for measuring headline inflation, came in at 7.23% (on a year-on-year basis) for April 2012, after having dipped to 6.89% (year-on-year) in March 2012.

If you look at the consumer price index, which measures price rise based on the consumption basket of rural and urban consumers, the inflation rate touched 10.36% in April 2012, compared to 9.38% in March. So, there’s also a sense of the inflation rate rising, thereby fulfilling condition two of stagflation.

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