Crisil cuts India’s GDP growth forecast to 7.3% for FY23 as inflation soars

Crisil in its report stated that there are several negative factors affecting the GDP of India.

On Friday, July 1, rating agency Crisil has lowered India’s gross domestic product (GDP) growth forecast to 7.3% from 7.8% for the fiscal year 2023. The cause of this fall is higher oil prices, rise in inflation and a slowdown in exports.

Crisil in its report stated that there are several negative factors affecting the GDP of India. “The only bright spots are the uptick in contact-intensive services and forecast of a normal and well-distributed monsoon,” Crisil said in its report.

As per the report, the prices of necessary commodities will further rise due to increasing oil prices and a disrupted supply chain. “High commodity prices have a domino effect on India. As the terms of trade worsen with a rising import bill, imported inflation surges.”

With all these negative factors working in unison, there will be constant pressure on the currency, as per the report. The rating agency has estimated the rupee to be at 78 compared to 1 USD in March 2023.

“The rupee-dollar exchange rate will remain volatile with a depreciation bias in the near term due to a widening trade deficit, foreign portfolio investment (FPI) outflows and strengthening of the US dollar index (owing to rate hikes by the US Federal Reserve, or Fed, and safe-haven demand for the dollar amid geopolitical risks),” it said.