For the fiscal year ending March 31, 2023, the global rating agency CRISIL has downgraded its prediction for India's real gross domestic product (GDP) growth to 7.3 percent from 7.8 percent earlier, citing increased oil costs, sluggish export demand, and greater inflation.
The rating agency in its report said that inflation lowers purchasing power and would weigh on the revival of consumption, - the largest component of GDP which has been backsliding for a while.
The consumer price index-based, or retail inflation, is predicted to rise to 6.8 percent on average this fiscal year, up from 5.5 percent last year. "However, a normal monsoon forecast and revival in contact-intensive sectors are expected to bring some succour," it said.
As per the report by CRISIL, "this year's heat wave will have an impact on domestic food production, and combined with persistently high international commodity prices and input costs, will produce a broad-based increase."
It further underlined the unfavorable outlook for India's current account balance created by rising commodity costs, slower global growth, and supply chain bottlenecks." we anticipate the current account deficit (CAD) to widen to 3 percent of GDP this fiscal, up from 1.2 percent in fiscal 2022", it said.