INDUSTRY body FICCI on Thursday said, India’s economy is estimated to grow 7 per cent in the current fiscal, lower than the earlier projection of 7.4 per cent, mainly due to the ongoing geopolitical uncertainties. FICCI’s Economic Outlook Survey (July 2022) 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.
“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,” FICCI said.
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.
“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,” it said.
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.
Economists who participated in the survey opined that the global economy’s prognosis in 2023 will be determined by the inflation trajectory, the extent of interest rate hikes required to maintain price stability, and the impact of higher rates on household consumption and investment demand.