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India Ratings and Research (Ind-Ra) in its latest report has said that the many rising headwinds, both domestic as well as external, are expected to pull down India’s Gross domestic product (GDP) growth to 4-4.5 per cent in the second half of FY2023 (H2FY23), shaving off the better numbers in the first half. It noted that in the first half of the current fiscal, the economy has grown at 9.7 per cent -- 6.3 per cent in the September quarter and 13.5 per cent in the previous three months, and forecasts for the full year vary from a low of 6.6 per cent to 7 per cent.

The report said notwithstanding this, the economy still has a lot of ground to cover which was lost due to the pandemic as the CAGR during Q1FY20-Q2FY23 works out to be a paltry 2.5 per cent, significantly lower than the CAGR of 5.3 per cent during Q2FY17-Q2FY20. Even at the disaggregate level, key employment-intensive sectors like manufacturing and trade, hotels, transport and communication clipped at a CAGR of just 2 per cent and 0.7 per cent, respectively during this period while the CAGR for Q2FY17-Q2FY20 were 3.4 and 8.1 per cent, respectively.

The report also pointed to the muted wage growth at the lower end of the income pyramid, resulting in a skewed recovery of consumption demand. A broad-based recovery in consumption demand is imperative for sustained growth. The road ahead will not be without hiccups as synchronous global monetary tightening has increased financial fragility and downside risks to global growth which would impact the Indian economy as well. It also noted the nascent industrial output growth, which fell to an eight-quarter low of 1.5 per cent in Q2FY23 from 9.5 per cent on-year.