: Crisil, Icra lower India growth projections #FinanceIndia #StockMarketNEWS #Business Press Trust of India New Delhi Rating agencies Crisil and Icra on Monday revised down their India growth

@StockMarketNEWS Tue 22 Nov, 2022

Posted in: #FinanceIndia #StockMarketNEWS #Business

Crisil, Icra lower India growth projections #FinanceIndia #StockMarketNEWS #Business
Press Trust of India

New Delhi

Rating agencies Crisil and Icra on Monday revised down their India growth projections for the current fiscal and the second quarter mainly due to the ripple effect of slowdown in global growth and mixed crop output.

Crisil downgraded the India growth forecast by 30 bps to 7% while Icra pegged the economic expansion at 6. 5% for the second quarter of FY2022-23.

“We have revised down our forecast for real gross domestic product growth to 7% for fiscal 2023 from 7. 3%, primarily because of the slowdown in global growth that has started to impact our exports and industrial activity.

Aditi Nayar, his counterpart at Icra, in her report pencilled a 6. 5% growth in Q2 of the current fiscal, nearly half of the year-ago quarter when the economy had clipped at 12. 7%, but which is still a tad higher than the monetary policy committee’s September forecast of 6. 3% and at 6. 5% in gross value added (GVA) less than half of 13. 5% a year ago.

She attributed the lower numbers to the mixed crop output trends revealed by the advance estimates of kharif production, adverse input cost movements for certain sectors with a higher fuel intensity, as well as the impact of the flagging external demand on non-oil merchandise exports, which whittled down the gains from robust demand for contact-intensive services, healthy capital spending by government and pre-festive season stocking of goods.

She also said, however, GDP growth over the pre-Covid levels is expected to double to around 8% in Q2 relative to 3. 8% seen in the previous quarter.

The agency estimates the sectoral growth in Q2 to be driven by the services sector (9. 4%), with a subdued trend foreseen for the industry (2%), and agriculture, forestry and fishing (2. 5%).

Joshi said he is paring growth forecast only by 30 bps as domestic demand still remains supportive, helped by a catch-up in contact-based services, government capex, relatively accommodative financial conditions, and overall normal monsoons for the fourth time in a row.

But Joshi warned that the ripple effect of the global slowdown will be felt more next fiscal, which will put domestic demand under pressure as interest rate hikes get transmitted more to consumers, and the catch-up in contact-based services fades.

“Consequently, we expect GDP growth to slow to 6% in fiscal 2024, down from 6. 5% estimated previously, with more downside risks to the revised forecast,??? Joshi said.

Despite the markdown in near-term growth, the country is expected to remain a growth outperformer over the medium-run, he said, and expects GDP growth to average 6. 6% between fiscals 2024 and 2026, compared to the 3.