Asian Development Bank (ADB) has lowered the economic growth projection for India for current FY to 7.2 percent, with impacts of COVID crisis and Russia-Ukraine war getting exacerbated by high inflation.
In April, the multilateral funding agency had forecast the Indian economy to grow by 7.5 percent. It also revised downwards the economic growth in fiscal ended March 2022 to 8.7 percent from 8.9 percent estimated earlier.
India's GDP growth moderated to 4.1 percent in Q4 of fiscal year ended March 2022 on disappointing growth in private consumption and a contraction in manufacturing, ADB said in its supplement to the Asian Dev Outlook (ADO) for 2022.
"India has been hit by the omicron variant and the economic impact of the war in Ukraine. Consequently, GDP growth for FY2021 is revised down from 8.9 percent to 8.7 percent and from 7.5 percent to 7.2 percent for FY2022 (fiscal to be ending in March 2023).
"Although consumer confidence continues to improve, higher-thanexpected inflation will erode consumer purchasing power," ADO Supplement released on Thursday said. Some of the impacts of this may be offset by a cut in excise duties, the provision of fertilizer and gas subsidies, and the extension of a free food distribution programme, it said.
Private investment will soften due to the higher cost of borrowing for firms as the RBI continues to raise policy rates to contain inflation. "The economic impact of the pandemic has declined across most of Asia, but we are far from a full and sustainable recovery," said ADB Chief Economist Albert Park.
The slowdown in the pace of China's economy has been observed