On Wednesday, the S&P global rating cut India’s growth forecast for the current fiscal year from 7.8 percent to 7.3 percent due to rising inflation and the expected Russia-Ukraine conflict. In its Global Macro Update for Growth Forecast, S&P said inflation is a matter of concern for the long term to remain high, which would require central banks to raise rates higher than currently set, risking a hard landing with a larger impact on output and employment. S&P had projected India’s GDP growth in FY 2022-23 in December last year, starting April 1, 2022, at 7.8 percent.
The growth forecast for the current financial year has been brought down to 7.3 percent. In the next financial year, the growth has been estimated at 8.5 percent. “Our forecast risk has increased since our last forecast round and is firmly on the downside. The Russia-Ukraine conflict could drag on and escalate more than it did before, and in our view, the risks are more likely to be negative, “the S&P said.
The Indian economy is projected to grow by 8.9 per cent in the last fiscal (2021-22). S&P has set a CPI of 6.9 per cent for the current financial year.
Following the Russia-Ukraine war and rising commodity prices, various global organizations have recently downgraded India’s growth forecast. In April, the World Bank lowered India’s GDP forecast for FY 2022-23 from 7.6 percent to 8 percent, while the IMF cut its forecast from 9 percent to 8.2 percent.
The Asian Development Bank (ADB) has projected India’s growth at 7.5 percent, while the RBI last month lowered its forecast for 7.2 percent to 7.2 percent amid volatile crude oil prices and disruption in the supply chain due to the Russia-Ukraine war. .