S&P projects India's GDP growth at 7.3 pc this fiscal

The growth last year 2021-22 was 8.7 percent. Indian economy expanded 13.5 percent in the April-June quarter, sequentially higher than the 4.10 percent growth clocked in the January-March period. On inflation, SP Global Ratings pegged the average rate in the current fiscal at 6.8 percent and projected it to fall to 5 percent in the next fiscal beginning April 2023. India's headline Consumer Price Inflation CPI is likely to remain outside the Reserve Bank of India's upper tolerance limit of 6 percent until the end of 2022.

S&P Global Ratings on Monday projected India's economic growth at 7.3 percent in the current fiscal with downside risks and said inflation is likely to remain above RBI's upper tolerance threshold of 6 percent till the end of 2022.

In its Economic Outlook for the Asia Pacific, S&P said India's growth next year will get support from domestic demand recovery after the coronavirus pandemic.

''We have retained our India growth outlook at 7.3 percent for the fiscal year 2022-2023 and 6.5 percent for the next fiscal year, although we see the risks tilted to the downside,'' it said.

Other agencies have cut India's GDP growth forecast amid higher inflation and rising policy interest rates. Earlier this month, Fitch Ratings slashed the growth estimate to 7 percent for the current fiscal from 7.8 percent pegged earlier. India Ratings & Research too had reduced its projections to 6.9 percent from 7 percent earlier.

Asian Development Bank has cut the projection to 7 percent from 7.5 percent earlier.

The Reserve Bank of India (RBI) expects the Indian economy to grow 7.2 percent in the current fiscal (April-March). The growth last year (2021-22) was 8.7 percent.

Indian economy expanded 13.5 percent in the April-June quarter, sequentially higher than the 4.10 percent growth clocked in the January-March period.

On inflation, S&P Global Ratings pegged the average rate in the current fiscal at 6.8 percent and projected it to fall to 5 percent in the next fiscal beginning April 2023.

''India's headline Consumer Price Inflation (CPI) is likely to remain outside the Reserve Bank of India's upper tolerance limit of 6 percent until the end of 2022. That's amid substantial weather-induced wheat and rice price increases as well as sticky core inflation. And food inflation may rise again,'' it said.

Retail or consumer price inflation has remained above RBI's upper tolerance threshold of 6 percent for the eighth month in a row and was at 7 percent in August. Wholesale price inflation remained in double digits for the 17th straight month and was at 12.41 percent in August.

According to S&P Global Ratings, elevated core inflation would drive up policy rates further in India, and projected policy interest rates to be 5.90 percent by the end of this fiscal.

To tame stubbornly high inflation, the central bank has already hiked benchmark interest rates by 1.40 percentage points to 5.40 percent. In its monetary policy review on September 30, RBI is expected to hike rates by another 50 basis points to a three-year high level of 5.90 percent.

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