Domestic rating agency Icra has cut India’s growth forecast by 0.8 per cent to 7.2 per cent for the fiscal year 2022-23 due to the Ukraine crisis. This is less than the RBI’s estimate. The Reserve Bank of India (RBI) has projected the Indian economy to grow by 7.8 percent in the next financial year.
However, the central bank will introduce the first bi-monthly monetary policy for the next fiscal in early April. In this, the growth rate estimate will be reconsidered.
what said: ICRA Chief Economist Aditi Nayar cited a jump in commodity prices and supply chain disruptions due to the military conflict in Ukraine as the main reasons for the fall in growth forecast. According to the rating agency, the real growth in gross domestic product (GDP) during the last quarter of the current financial year is likely to be three to four percent, as against 5.4 percent during the third quarter. With this, the real growth rate in GDP in the current financial year is estimated to be 8.5 percent.
“Higher prices of commodities like fuel and edible oils may reduce the disposable income of the middle to lower class, which may impact the revival in demand in FY 2022-23,” Nair said.
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Welcoming the extension of the free food grains scheme till September 2022, he said that this would give some relief to the weaker sections in their food budget front.