S&P lowers growth forecast
Due to rising inflation, the Reserve Bank, Morgan Stanley, IMF, World Bank, ADB and UBS have already cut their estimates.
S&P has slashed its growth forecast for India due to the impact of the Russia-Ukraine crisis and rising inflation. According to S&P Global Ratings, India’s GDP growth rate in the current financial year could be 7.3 percent due to the prolonged rise in inflation due to the longer than expected Russia Ukraine Crisis. Earlier, the agency had given an estimate of 7.8 percent growth for this year. In its report, S&P has said that the pressure on the central bank can increase significantly due to the inflation rate staying at the upper levels for a long time. Because of this, loan rates will be expensive and production will be affected badly due to fall in demand. Earlier, many other agencies had given estimates of reduction in growth rates for the country. With this, S&P has given an estimate of inflation for the current financial year at 6.9 percent. Which is above the 6 percent limit of the Reserve Bank.
Many other agencies and institutions also reduced the growth estimate
Due to rising inflation, the Reserve Bank, Morgan Stanley, IMF, World Bank, ADB and UBS have already cut their estimates. The World Bank in April has reduced India’s GDP growth forecast for 2022-23 from 8.7 percent to 8 percent. While the IMF has reduced the growth forecast for the same period from 9 percent to 8.2 percent. The Reserve Bank has reduced the GDP growth estimate from 7.8 percent to 7.2 percent only last month. Along with this, Morgan Stanley has reduced its growth forecast from 7.9 percent to 7.6 percent and UBS has reduced its growth forecast from 7.7 percent to 7 percent. At the same time, rating agency ICRA has retained the GDP growth estimate of 7.2 percent for the financial year 2022-23. In all reports, rising inflation due to the Russia-Ukraine crisis has been cited as the main reason for the cut in growth estimates.
Wholesale inflation reaches the highest level in 9 years
In April, wholesale inflation rose to 15.08 percent, the highest level in nine years. In the month of March, the wholesale inflation stood at 14.55 percent. The rise in inflation rate is much higher than the market estimate. Retail inflation has also reached a new high of 8 years. According to the data released during the last week, the retail inflation rate has reached 7.79 percent in April. This jump in inflation has been seen due to the rise in the prices of food items and oil. This level of retail inflation is the highest level ever since May 2014. This is the fourth consecutive month that retail inflation has crossed 6 per cent. The Reserve Bank has kept the upper limit for retail inflation at 6 percent.
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