India’s GDP Growth for FY23 Is Estimated at 7.4%: FICCI

The FICCI’s Economic Outlook Survey released on Sunday said that India’s GDP is estimated to grow at 7.4% in the financial year (FY) 2022-23, with rising prices due to the Russia-Ukraine conflict being the biggest challenge to the global economic recovery.

According to the FICCI (Federation of Indian Chambers of Commerce and Industry) survey, the Reserve Bank of India (RBI) is likely to initiate a rate hike cycle in the second half of 2022, while there is an expectation of a repo rate hike of 50-70bps by the end of the current fiscal. 

The FICCI survey also noted that the RBI would continue to support the ongoing economic recovery by retaining an unchanged repo rate in its April policy review.

Findings of FICCI’s Survey

The FICCI’s Economic Outlook Survey was conducted in March 2022 to gauge the response from economists representing various sectors like banking, industry and financial services. The economists were asked for their forecast on key macro-economic variables for Q4 (January- March) of FY22, FY 2022-23 and Q1 (April-June) of FY23.

The industry body, FICCI, stated that the latest round of its survey asserts an annual median GDP growth forecast at 7.4% for 2022-23 with a minimum and maximum growth estimate of 6% and 7.8%, respectively.

The median growth forecast for the industry and services sector is estimated to grow by 5.9% and 8.5%, respectively. The medium growth forecast for agriculture and allied activities is estimated to grow at 3.3% for FY 2022-23. However, the downside risks to growth remain escalated. 

Impact of Russia-Ukraine Conflict on GDP

Ths survey stated that the continuation of the Russia-Ukraine conflict poses a significant challenge to global recovery even as there is a looming threat from the COVID-19 pandemic. The increasing international commodity prices are the highest risk emanating from the ongoing conflict since Russia and Ukraine are global suppliers of essential commodities.

The survey also stated that if the Russia-Ukraine conflict continues for a longer period, it will further hit supplies of primary raw materials, including natural gas, fertilisers, crude oil, and metals.

The economists who participated in the survey opined that global inflation would likely peak in the first half of 2022 and moderate after that. The sharp increase in crude prices represents a massive shock to India’s macro-economic framework since India is a net importer of crude oil to meet its energy requirements. The survey stated that the impact on the economy would be more severe if there were prolonged conflict. 

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