new Delhi. The Russia-Ukraine war is expected to impact India’s Gross Domestic Product (GDP) growth. This is likely to have an impact on GDP as well as demand recovery (improvement in demand).
The crisis has led to a global jump in international prices of crude oil, natural gas, coal, nickel, copper, aluminium, titanium and palladium.
It is also feared that higher commodity costs will also hit the manufacturing and infrastructure sectors, which are important contributors to growth and job creation.
The manufacturing sector is already grappling with the cost of expensive goods due to increase in its international demand and supply constraints.
In addition, India is a major importer of these precious and industrial goods.
Additionally, low manufacturing growth will have a direct impact on the country’s GDP growth as well as job creation.
ICRA Chief Economist Aditi Nair said, “We expected India’s GDP to grow by 8 per cent in FY2023, growing from its low base in the first half, although this was contingent on the government’s budgetary capex. Happening.”
“However, prolonged geopolitical tensions and high commodity prices pose major downside risks,” Nair said.
Earlier, the seasonally adjusted IHS Ma*++++++++++++++++++++++++++++RT India Manufacturing Ring Purchasing Managers’ Index for February (PMI) report further increased the average input cost faced by Indian manufacturers.
It said purchase price inflation remained sharp, but fell to a six-month low. Part of this additional cost burden was paid in the form of higher sales charges, although the rate of increase was modest.
The expected increase in domestic petrol, diesel and fertilizer prices may necessitate a cut in excise duty to mitigate the impact on the economy.
However, the move may cost the Center up to Rs 90,000 crore of tax revenue on cut only fuel excise duty, which will impact spending capacity in terms of FY2023 budget capex.
India Ratings and Research analyst Paras Jasrai said, “If the government goes ahead with cutting excise duty to bring down fuel prices, it could further widen the central government’s fiscal deficit and further increase the interest rate.” which is already 6.8 per cent (March 10, 2022).”
Jasrai said, “As a result, the Center may have to cut its capex plans. The 10-year SDL yield has also climbed up to 7.24 per cent in the recent auction of March 8, 2022. Higher cost of borrowing puts its limit on fiscal deficit. Will disrupt the capex plans of the states to maintain.”
—AnyTV News
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