India's growth will be adversely affected by Russia-Ukraine war
Published On: Monday, March 7, 2022 | By: Team KnowMyStock
India's growth in the next financial year will be adversely affected by factors like Supply disruptions and trade shocks emanating from the Russia-Ukraine conflict, a possible sharp rise in inflation in the next 6-8 months, fiscal pressures, and a widened current account deficit (CAD). Growth is expected to be less than 8% in FY23, economists said as they pitched for a cut in excise duties on oil to cushion the impact on inflation. The Economic Survey had forecast 8-8.5% growth in FY23 at the end of January, days after the International Monetary Fund (IMF) had pegged India's gross domestic product (GDP) growth for the year at 7.1%. Oil prices have hit their highest levels in almost a decade.HDFC Bank expects FY23 CAD at 2.3% and has lowered its FY23 growth forecast to 7.9% from 8.2% projected earlier.
India's CAD was 1.3% of GDP in the September quarter against a current account surplus of 0.9% in the trailing quarter. The government will release third-quarter numbers by the end of this month.
"Our estimate is that every $10 increase in the average price of crude oil in FY23 will widen the CAD by $14-15 billion," said Aditi Nayar, chief economist at ICRA.Others also see key indicators getting impacted.
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