S&P Cuts India GDP Growth Forecast On Rising Inflation, Russia-Ukraine War

S&P Global Ratings has cut India's GDP growth forecast for 2022-23 to 7.3% from 7.8% earlier due to rising inflation and the Russia-Ukraine war.

For the next fiscal, the growth has been pegged at 6.5%. The Indian economy is estimated to have clocked a GDP growth of 8.9% in FY22.

"The risks to our forecasts have picked up since our last forecast round and remain firmly on the downside. The Russia-Ukraine conflict is more likely to drag on and escalate than end earlier and deescalate, in our view, pushing the risks to the downside," S&P said. 

The ratings agency has forecast India's retail inflation, measured by the Consumer Price Index, at 6.9% in the current fiscal.

In the aftermath of the Russia-Ukraine war and rising commodity prices, several global agencies have tempered their outlook on Indian economy. In April, the World Bank cut its India GDP growth forecast for FY23 to 8% from 8.7% predicted earlier, while IMF has cut the projections to 8.2% from 9%.

Asian Development Bank has projected India's growth at 7.5%, while the Reserve Bank of India has cut its forecast to 7.2% from 7.8%.