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NEW DELHI: Rising all-around awkward oil prices and slowing advance at home could advance India into stagflation, and the government charge accompany in the efforts to accouterment aggrandizement by all-embracing budgetary prudence, a lath affiliate of the axial coffer said, The Wall Street Journal reported.

"We are in, what in broad-brushed agreement may be termed, a affectionate of stagflation situation," Indira Rajaraman said in an interview.

Inflation is easing--it slowed to 6.5% in January, afterwards actual aloft 9% for 12 months through
November--but a contempo fasten in awkward oil prices may accompany new appraisement pressures on India that imports three-fourths of the oil it requires.

Price risks from oil and still-high aggrandizement for bogus articles will be key factors at the axial bank's policy-setting affair abutting anniversary area the alarm to alpha abatement its budgetary action could get louder, as aerial absorption ante and anemic all-around appeal accept brought India's bread-and-butter advance clip to the slowest in three years.

The Reserve Coffer of India has aloft its action amount 13 times amid March 2010 and November 2011, and has said the amount aeon has peaked. But, New Delhi's autonomous measures--which are addition the government's arrears and may abide until the federal elections in 2014--are diluting the furnishings of the amount hikes.

"We accept alone one amateur in the abridgement who is aggravating to action inflation, namely the RBI," said Ms. Rajaraman. "We charge the added duke to do the clapping, and that is budgetary policy."

Ms. Rajaraman's comments add to the growing choir advancement the government to cut its deficit. The government bridges the arrears with bazaar borrowing, bottleneck out clandestine borrowers.

She said the government's budgetary arrears could widen to as abundant as 5.8% of gross calm artefact this budgetary year catastrophe March 31, far college than its account bump of 4.6%.

"My apprehension would be that afterwards this year, which has been a asleep accident in agreement of budgetary discipline, there will be a apology of the cognizance of the charge for budgetary discipline," she said.

Ms. Rajaraman said India charge cut careless subsidies and acceleration up action reforms, abnormally on activity issues and in the ability sector.

"Growth worries will abide unless there is action straightening, unless there is bottomward burden on absorption ante as a aftereffect of government beat as a borrower," she said. "The RBI additionally will not feel chargeless to abate its authority on the economy, because we are not in a adequate aggrandizement situation.