CRISIL cuts FY23 GDP growth estimate to 7.3% from 7.8% on high inflation

Date:

Domestic rating agency Crisil lowered its real GDP growth forecast for India to 7.3 per cent in FY23 from 7.8 per cent estimated earlier.

It attributed the downward revision to higher oil prices, slowing of export demand and high inflation. This is in line with the RBI’s estimate of 7.2 real GDP growth for this fiscal year.

Crisil said there are a slew of negatives like high commodity prices, elevated freight prices, drag on exports as global growth projections get lowered, and the largest demand side driver of private consumption remaining weak.

Inflation, which has been pegged to average at 6.8 per cent in FY23 as against 5.5 per cent in FY22, reduces purchasing power and would weigh on revival of consumption the largest component of GDP which has been backsliding for a while, the agency said.

Factors contributing to the broad-based rise in inflation will include the impact of this year’s heatwave on domestic food production, coupled with persisting high international commodity prices and input costs, it said.

The agency also said that with higher commodity prices, slowing global growth and supply chain snarls, the current account will be impacted, and estimated the current account deficit to widen to 3 per cent of GDP in FY23 from 1.2 per cent in FY22.

This will put pressure on the currency, and the rupee is estimated by the agency to be at 78 to the US dollar in March 2023, compared to 76.2 in March 2022.

The rupee-dollar exchange rate will remain volatile with a depreciation bias in the near term due to a widening trade deficit, foreign portfolio investment (FPI) outflows and strengthening of the US dollar index (owing to rate hikes by the US Federal Reserve, or Fed, and safe-haven demand for the dollar amid geopolitical risks), it said.

The agency expects global crude to average between USD 105-110 per barrel in FY23, which is higher by 35 per cent when compared to the last fiscal year’s and will be the highest price since 2013.

━ related

Live Updates on RBI Monetary Policy: Key Decisions and Implications

Stay informed with live updates on the Reserve Bank of India's (RBI) monetary policy. This article provides real-time information on the central bank's policy decisions, including interest rates, liquidity measures, and other economic indicators, along with their potential impact on the Indian economy and financial markets.

Celebrating World Oceans Day 2023: Preserving Our Blue Planet

World Oceans Day 2023 is a global celebration that emphasizes the significance of our oceans and the urgent need to protect and preserve them. This year's theme highlights the crucial role of oceans in sustaining life on Earth and calls for collective action to address the environmental challenges they face.

Ukraine’s Nova Kakhovka Dam Disaster: Key Points on the Strategically Important Reservoir

The Nova Kakhovka Dam in Ukraine has recently experienced a disaster, highlighting the significance of this strategically important reservoir. Here are key points to understand the implications of the incident and its potential impact on Ukraine's water management, energy production, and regional stability.

World Bank Cuts India’s GDP Growth Forecast for FY24 to 6.3% While Raising Global Outlook

The World Bank has revised India's GDP growth forecast for the fiscal year 2023-2024, projecting a rate of 6.3%. This downward revision reflects the challenges faced by the Indian economy, while the global outlook has been revised upwards. The World Bank's assessment highlights the need for policy measures to address the factors impacting India's economic growth.

Tata Group Signs $1.6 Billion EV Battery Plant Deal in Gujarat

The Tata Group, a prominent conglomerate in India, has inked a significant deal worth $1.6 billion to establish an electric vehicle (EV) battery manufacturing plant in Gujarat. This strategic move reflects Tata's commitment to the development of sustainable mobility solutions and positions the company at the forefront of India's electric vehicle revolution.