S&P Expects Indian Economy To Grow At 7.3% In Current Fiscal; Inflation Likely At 6.8%

S&P Global Ratings on Monday said the Indian economy is expected to grow at 7.3 per cent in the current financial year 2022-23. It added that the causes of this downward pressure on growth are high oil prices, slowing global demand for India’s exports, and high inflation. S&P also expects inflation at 6.8 per cent for this fiscal year, which is above RBI’s target level.


“We expect India’s GDP to grow by 7.3 per cent in fiscal year 2023 compared with 7.8 per cent three months ago. The causes of this downward pressure on growth are high oil prices, slowing global demand for India’s exports, and high inflation. The latter is curbing the purchasing power of the poor because energy and food, key drivers of current inflation, account for a chunk of their consumption basket. But there are also factors supporting growth,” S&P Global Ratings said in its latest report, titled ‘Economic Outlook Asia-Pacific Q3 2022’.

It said a normal monsoon is forecast for 2022. This will support agriculture production and help control food inflation. A rebound in contact-based services–as vaccination penetration improves and people learn to live with the virus–will also boost growth.

“Overall, we revised down our GDP growth forecast for Asia-Pacific ex China in 2022 by a modest 0.1 percentage point compared with our May interim update to 4.9 per cent; compared to the outlook of three months ago the new forecast implies a downward revision of 0.3 percentage point,” the report said.


The retail inflation in India soared to 7 per cent in August, compared with 6.71 per cent in July. This comes after three months of India’s retail inflation easing from its peak, following the Reserve Bank’s repo rate hikes since May. The RBI’s rate-setting panel will announce its monetary policy decision on Friday (September 30).

The report said, “CPI inflation is the highest in India, where a relatively unresponsive supply side has kept inflation elevated. High fuel and commodity prices triggered the initial rise in inflation, but it has become broad-based and persistent. Despite relatively weak consumer demand in many pockets, core inflation remains elevated as companies protect margins by passing on the rising input costs to consumers. The rebound in contact-based services is also contributing to inflation.”

S&P also said it expects consumer inflation of 6.8 per cent this fiscal year, and 5.8 per cent for the last quarter January-March 2023.

The Reserve Bank expects the Indian economy to grow 7.2 per cent in the current fiscal (April-March). The growth last year (2021-22) was 8.7 per cent. Indian economy expanded 13.5 per cent in the April-June quarter, sequentially higher than the 4.10 per cent growth clocked in the January-March period.

Several other agencies, including ADB, Fitch Ratings and Citigroup, have already slashed India’s growth projections to either 7 per cent or below. ADB and Fitch pegged India’s growth estimate at 7 per cent, while Ind-Ra, SBI and Citigroup expect it to be 6.9 per cent, 6.8 per cent and 6.7 per cent, respectively.

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