New Delhi: Domestic rating agency Crisil on Friday lowered its real GDP growth forecast for India to 7.8 per cent from 7.3 per cent in FY13. In line with RBI’s estimate of 7.2 real GDP for this financial year. Crisil said higher commodity prices, higher commodity prices, pressure on exports reduce global growth projections, and are the biggest demand side drivers such as negatives. Private consumption remains weak. The only bright spots are the increase in contact-intensive services and the forecast of a normal and well-delivered monsoon, lowering its growth outlook.
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The agency said inflation, which has been pegged at an average of 6.8 per cent in FY13 as against 5.5 per cent in FY12, weighs down on purchasing power and the revival of consumption, which is the largest component of GDP. , which has been backsliding for some time. Factors contributing to the broad-based rise in inflation will include the impact of this year’s heat on domestic food production, coupled with higher international commodity prices and input costs.
The agency also said that with higher commodity prices, slower global growth and supply chain disruptions, the current account would be affected, and estimated the current account deficit to rise from 3 per cent of GDP in FY12 to 3% in FY12. will be 1.2 percent. Put pressure on the currency, and the rupee is projected to be at 78 in March 2023 against the US dollar in March 2023, as against 76.2 in March 2022.
With a widening trade deficit, foreign portfolio investment (FPI) outflows and a strengthening of the US dollar index (due to rate hikes by the US Federal Reserve, or safe-haven demand for the dollar amid the Fed, and geopolitical risks), it Told.
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The agency expects the global crude oil average in FY13 to be in the range of $105-110 a barrel, up 35 percent from the previous fiscal year and the highest price since 2013.
Higher commodity prices have a domino effect on India. As the terms of trade worsen with rising import bill, imported inflation rises, it said.
With inflation picking up, the RBI expects a further 75 basis points increase during the financial year on top of the increase of 90 basis points already announced, it said.
However, rising interest rates will not impact growth prospects to a large extent as real interest rates are likely to remain below pre-pandemic levels and monetary policy action is transmitted with a lag, it said.