rating agencies S&P Global Ratings (S&P) on Monday cut India’s economic growth forecast to seven per cent. However, it also said that due to domestic demand, the impact of global slowdown on the economy will be less. Earlier in September, the agency had predicted India’s GDP (Gross Domestic Product) growth rate to be 7.3 percent in 2022-23 and 6.5 percent in 2023-24. The global slowdown will have less impact on domestic demand-driven economies like India, said Louis Kuijs, chief economist for Asia Pacific at S&P Global Ratings. India’s economic growth rate is estimated to be seven percent in the financial year 2022-2023 and six percent in the next financial year. Even before this, many rating agencies including Moody’s, Incra, Goldman have predicted India’s GDP growth rate for the current financial year. The estimate has been reduced. The reason for this is being said to be the effect of slowdown in the world on India.
GDP growth rate was 8.5% in the year 2021
It is noteworthy that India’s GDP growth rate in the year 2021 was 8.5 percent. S&P said in the updated quarterly economic report for the Asia-Pacific region that the post-Covid demand recovery in some countries is expected to accelerate further. This will support economic growth in India next year. Regarding inflation, the rating agency said it will average 6.8 per cent in the current financial year and the Reserve Bank of India’s standard interest rate is likely to rise to 6.25 per cent in March 2023. RBI has already increased the policy rate by 1.9 percent to bring inflation under control. With this, the key policy rate repo has reached a three-year high of 5.9 per cent.
Relief in retail inflation
The country’s wholesale and retail inflation declined in the month of October. It has remained above the tolerable level almost all year due to supply constraints due to Russia-Ukraine war. Inflation based on the Consumer Price Index stood at a three-month low of 6.7 per cent, while the wholesale inflation came down to a 19-month low of 8.39 per cent. Regarding the exchange rate, S&P said that the currency reserves in the emerging market of Asia have decreased. By the end of March, the rupee is estimated to be 79.50 per dollar, which is now 81.77.
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