of the country Gross domestic product (GDP) According to the FICCI Economic Outlook Survey, it is expected to grow at 7.4 per cent in the current fiscal year 2022-23. It predicts growth for Agriculture and 3.3 per cent on allied activities, while 5.9 per cent and 8.5 per cent for industry and services sectors, respectively, during the financial year.
However, it called downside risk. Economic Development remains enlarged. “While the threat from the pandemic continues to emerge, the continuation of the Russia-Ukraine conflict presents a significant challenge to global recovery.”
Industry body FICCI in a statement on Sunday also said that global growth may slow down by 50-75 basis points due to the conflict, as per projections provided by survey participants, and the prospects of a post-COVID-19 recovery. can reduce further.
“The latest round of FICCI’s Economic Outlook Survey estimates annual average GDP growth at 7.4 per cent for 2022-23 – with minimum and maximum growth forecast at six per cent and 7.8 per cent, respectively,” the industry body said.
FICCI’s Economic Outlook Survey was conducted in March 2022 and received responses from leading economists representing industry, banking and financial services sector. The economists were asked to provide forecasts for key macroeconomic variables for the year 2022-23 and January-March 2022 and April-June 2022 quarters.
The current Russia-Ukraine conflict is expected to lead to further increase in price increases through imported goods. Average WPI inflation for the March 2022 quarter has been estimated at 12.6 per cent.
The industry body said retail inflation is also operating above the RBI’s target range in January and February 2022 and there should be some relief in the coming financial year. “Volatically high international commodity prices are expected to move forward.”
The survey said global inflation is likely to peak in the first half of 2022 and moderate thereafter. A softening of price levels in the second half of the year will be supported by a moderation in the Chinese economy and an overall moderation in global growth momentum, easing demand, and monetary policy normalization/rate hikes by the US Federal Reserve.
Besides, exports which were providing a cushion for the loss of domestic output are likely to weaken as developed countries are also witnessing slowdown and move towards withdrawing fiscal stimulus. It said that to drive growth, the focus should be on private demand and investment in 2022-23. Nonetheless, despite the challenges, the Indian economy is in good shape over the medium term.
Participants said that as inflation concerns ease, public capital expenditure will outpace private capital expenditure. Recovery will depend on the infrastructure-led capital expenditure of the government. According to the FICCI Economic Outlook Survey, the need of the hour is to front-load the expenditure so that the signs of nascent recovery are not derailed.
Economists were of the view that fiscal policy should be forward-looking at this time and inflationary pressures can be controlled through excise duty cuts/subsidies. This will be important to keep private consumption expenditure safe as inflationary pressures strengthen.
The RBI is expected to continue to support the ongoing economic recovery by keeping the policy repo rate unchanged in its April announcement. Growth impulses are still nascent and consumer confidence has slowed and is yet to return to pre-pandemic levels.
Moreover, continued support to MSMEs remains important especially in view of the impact of the ongoing conflict on small enterprises. It is important that the cash flow of MSME enterprises is present to sustain the operations. There is a need to ensure that additional funds are available for MSMEs and it has been suggested that banks reduce the cash margin from 25 per cent to 10-15 per cent as per the survey.
India’s GDP grew by 5.4 per cent in the December 2021 quarter, compared to 8.4 per cent in the previous quarter.
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