FICCI lowers India`s economy growth forecast to 7% for current fiscal
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Amid ongoing geopolitical uncertainties, industry body -- the Federation of Indian Chambers of Commerce & Industry (FICCI) in its Economic Outlook Survey (July 2022) has said that India’s economy is estimated to grow 7 per cent in the current fiscal, lower than the earlier projection of 7.4 per cent. It also said the policy rate of the Reserve Bank of India is expected to reach 5.65 per cent by the end of this fiscal. Currently, the policy rate (repo) is 4.9 per cent. The present round of survey was conducted in June that covered leading economists representing industry, banking and financial services sector.
The survey has projected an annual median GDP growth for 2022-23 at 7 per cent, with a minimum and maximum growth estimate of 6.5 per cent and 7.3 per cent, respectively. FICCI said ‘growth forecast has been downgraded from the 7.4 per cent estimate in previous survey round (April 2022) owing to geopolitical uncertainty and its repercussions for the Indian economy’. The median growth forecast for agriculture and allied activities has been pegged at 3 per cent for 2022-23 while industry and services sectors are anticipated to grow 6.2 per cent and 7.8 per cent, respectively.
It further said ‘Indian economy is not immune to global volatility, as is evident from the deepening inflationary pressures and increasing uncertainty in financial markets. The participants pointed out that these factors are exerting pressure on India’s economic prospects and is likely to delay the recovery’. As per the survey, major risks to India’s economic recovery include rising commodity prices, supply-side disruptions, bleak global growth prospects with the conflict prolonging in Europe.
The survey has pegged the median forecast for CPI-based retail inflation rate at 6.7 per cent for 2022-23, with a minimum and maximum range of 5.4 per cent and 7 per cent, respectively. It added inflation levels are expected to slow down starting September 2022 and fall back into the 4 per cent range only by June 2023. As per the survey, ‘with upside risks to inflation remaining on fore, the government should work out a comprehensive roadmap which may require action at multiple levels’.
