The country’s gross domestic product (GDP) is expected to grow by 7.4 percent in the current fiscal year 2022-23, according to FICCI’s economic outlook survey. It forecasts growth for agriculture and related activities at 3.3%, while for industry and services sectors at 5.9% and 8.5%, respectively, in the fiscal year.
However, he said downside risks to economic growth remained elevated. “While the threat of the pandemic remains present, the continuing Russian-Ukrainian conflict poses a significant challenge to global recovery.”
Industry body FICCI also said in a statement on Sunday that according to estimates provided by survey participants, global growth could slow by 50 to 75 basis points due to the conflict, further dampening prospects for a post-war recovery. COVID-19.
“The latest round of the FICCI Economic Outlook Survey presents a median annual GDP growth forecast for 2022-2023 at 7.4% – with a minimum and maximum growth estimate of 6% and 7.8% , respectively,” the industry body said.
FICCI’s Economic Outlook Survey was conducted in March 2022 and collected responses from leading economists representing industry, banking and financial services. Economists were asked to provide forecasts for the main macroeconomic variables for the year 2022-23 and for the quarters of January-March 2022 and April-June 2022.
The current conflict between Russia and Ukraine is expected to further aggravate price increases through imported raw materials. The average inflation estimate based on the wholesale price index in the March quarter of 2022 was pegged at 12.6%, he said.
The industry body said retail inflation also exceeded the RBI target range in January and February 2022 and is expected to see some respite in the next financial year. “International commodity prices, unsustainably high, are expected to stabilize in the future.”
The survey indicates that global inflation is expected to peak in the first half of 2022 and moderate thereafter. The easing in price levels in the second half of the year will be supported by a slowing Chinese economy and an overall moderation in global growth momentum, a drop in pent-up demand and a normalization of politics monetary policy/rate hikes by the US Federal Reserve.
In addition, exports which provided a cushion to the loss of domestic output should be moderated as developed countries also experience a slowdown and move towards the withdrawal of fiscal stimulus. Private demand and investment should be front and center in 2022-23 to drive growth, he said. Nevertheless, despite the challenges, the Indian economy remains well positioned over the medium term.
Participants said that as inflation concerns ease, public investment spending will pile up in private investment spending. The recovery would depend on government investment spending focused on infrastructure. According to the FICCI economic outlook survey, the need of the hour is to anticipate spending so that the incipient signs of recovery do not derail.
Economists believed that at this stage, fiscal policy should take priority and inflationary pressures could be contained via excise/subsidy cuts. This will be important to preserve private consumer spending as inflationary pressures build, he said.
The RBI is expected to continue to support the ongoing economic recovery by keeping the repo rate unchanged at the April announcement. Growth impulses are still nascent and consumer confidence has been subdued and has yet to recover to pre-pandemic levels.
In addition, continued support to MSMEs remains essential, especially given the impact of the ongoing conflict on small businesses. It is important that MSME cash flows are in place to maintain operations. There is a need to ensure that additional funds for MSMEs are available and it is suggested that banks reduce the cash margin from 25% to 10-15%, according to the Survey.
India’s GDP grew by 5.4% in the December quarter of 2021, compared to growth of 8.4% in the previous quarter.
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