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Govt to release today India’s economic growth forecast for this fiscal year, weeks ahead of Budget announc – Economic Times

The Indian government will on Friday come up with its first advance estimate of economic output for the current fiscal year, amid widespread expectations that growth slowed on an annual basis while Asia’s third largest economy battles with inflation pressure.

New Delhi had pegged India’s growth at 8.7% in the last fiscal year that ended March 31, 2022.
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The first advance estimates are early forecasts and they usually undergo revisions as more data become available.

However, the growth projections will come weeks ahead of the Union Budget announcement that is scheduled for February 1. The estimates from the National Statistic Office is a key consideration for the policy proposals that Finance Minister Nirmala Sitharaman is planning.

The First Advance Estimates of GDP, introduced in 2016-17 is to serve as essential inputs to the Budget exercise, is based on limited data and compiled using the Benchmark-Indicator method i.e. the estimates available for the previous year are extrapolated using relevant indicators reflecting the performance of sectors.

India in fiscal year 2023, which will end on March 31 this year, can’t blame the likely growth deceleration on the pandemic. In fact, we saw robust rebound in activities and a super festive season demand.

Nonetheless, what hurt are the external headwinds such as slowing global growth, the Russia-Ukraine war and tightening of monetary policies to arrest the galloping inflation rate.
Tightening financial conditions hurt asset quality and result in financial sector stress. This limits credit push and impacts long-term growth.

However, in line with the global trend of monetary policy tightening to cool off inflation, the RBI has since May hiked the key repo rate — the rate at which the central bank of a country lends money to commercial banks — by 225 basis points in five instances last calendar year since May.

Moody’s had said earlier the global economy is on the verge of a downturn amid extraordinarily high levels of uncertainty amid persistent inflation, monetary policy tightening, fiscal challenges, geopolitical shifts and financial market volatility.

Most brokerages, key rating agencies, multilateral banks and even the Reserve Bank of India had recently cut India’s growth projection.

In its previous policy meeting in December, India’s central bank revised its forecast for real gross domestic product (GDP) growth downwards to 6.8%.

S&P had cut India’s FY23 GDP growth forecast by 30 bps to 7%, while Moody’s Investors Service lowered India’s economic growth projection for 2022 to 7% from 7.7% earlier.

IMF projects 6.8% growth in this financial year for India and also cautioned that the country’s fiscal space is at risk as it called for a more ambitious and well-communicated consolidation to ensure medium-term fiscal sustainability.

Nonetheless, India is seen to be better placed in the global scenario. The World Bank in its India Development Update had upgraded the forecast for the Indian economy to 6.9% from 6.5% earlier in the current fiscal year. It projects India to be one of the fastest-growing major economies. The slowdown in emerging economies could also position India as an attractive alternate investment destination, it said.

“Even after revision in our growth projections, India will still remain among the fastest-growing major economy,” RBI Governor Shaktikanta Das had said.

To be sure, in his post-policy address, the Governor said that while India is an island of stability in a very very turbulent world, in an interconnected world, we cannot be entirely decoupled from what is happening in the rest of the world.