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S&P lowers India growth projection to 7.3% for FY23


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With rising inflation and the longer-than-expected Russia-Ukraine conflict, S&P Global Ratings on Wednesday lowered India’s growth projection for the current fiscal year to 7.3% from 7.8% estimated earlier.

In December 2021, S&P had pegged India’s GDP growth for FY23 at 7.8%. For the next fiscal, the growth has been pegged at 6.5%. The Indian economy is estimated to clock a GDP growth of 8.9% for FY22.

“The risks to our forecasts have picked up since our last forecast round and remain firmly on the downside. The Russia-Ukraine conflict is more likely to drag on and escalate than end earlier and deescalate, in our view, pushing the risks to the downside,” S&P said in its Global Macro Update to Growth Forecasts.

S&P has pegged CPI or retail inflation in the current fiscal year at 6.9%. It said inflation remaining higher for long is a worry, which requires central banks to raise rates more than what is currently priced in, risking a harder landing, including a larger hit to output and employment.

In April, the World Bank slashed India’s GDP forecast for FY23 to 8% from 8.7% predicted earlier, while the International Monetary Fund (IMF) has cut the projections to 8.2% from 9%.

The Asian Development Bank (ADB) has projected India’s growth at 7.5%, while the Reserve Bank of India has cut its forecast to 7.2% last month from 7.8%, amid volatile crude oil prices and supply chain disruptions due to the ongoing Russia-Ukraine war.

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