The government’s department of economic affairs’ monthly economic review for October noted that global slowdown may dampen the country’s exports businesses outlook; however, resilient domestic demand, a re-invigorated investment cycle along with strengthened financial system and structural reforms will provide impetus to economic growth going forward.
New Delhi is optimistic about a moderately brisk growth rate due to the priority it accorded to macroeconomic stability. The IMF expects growth to moderate, reflecting the less favourable outlook and tighter financial conditions. Fitch Ratings feels India is somewhat insulated from the gloomy 2023 global outlook, given its modest reliance on external demand.
The IMF, whose executive board recently concluded the Article IV Consultation with India for this year, projected the country’s real gross domestic product (GDP) to grow at 6.8 per cent and 6.1 per cent in fiscals 2022-23 and 2023-24 respectively.
Uncertainty around the outlook is high, with risks tilted to the downside, the IMF noted. Reflecting broad-based price pressures, inflation in the country is projected at 6.9 per cent in FY23 and is expected to moderate only gradually over the next year, it said.
The current account deficit is expected to increase to 3.5 per cent of the GDP in FY23 as a result of both higher commodity prices and strengthening import demand, the IMF added.
Fitch Ratings feels declining exports and heightened uncertainty with higher interest rates are expected to slow growth to 6.2 per cent in FY24. Consumption growth is also anticipated to moderate as pent-up demand fades.
The general government deficit is expected to fall slightly to 9.6 per cent of GDP in FY23 from 9.8 per cent in FY22, Fitch said. For the Indian government, modest fiscal slippage is anticipated in FY23 with a deficit of 6.6 per cent of GDP (including disinvestment) relative to the 6.4 per cent budget target, it said in December.
Revenue growth and expenditure switching will, however, contain the measures’ fiscal toll, while allowing capital spending to remain a priority, and the worldwide economic slowdown is expected to reduce demand for Indian exports, Fitch added.
Deloitte India expects India to post 6.5-7.1 per cent economic growth during FY23 amid rising inflation and impending global slowdown. It anticipates 5.5-6.1 per cent growth in fiscal 2023-24 contingent on the revival of the global economy and improving economic fundamentals.
An impending global slowdown or even a recession in a few advanced nations as early as the end of 2022 or early next year is likely to make the inflation situation worse, Deloitte added.
Fibre2Fashion News Desk (DS)