Indian government cuts economic growth outlook sharply ahead of Union budget

 

After the pandemic-related distortions have subsided, the Indian government anticipates a slowdown in economic growth in the current fiscal year, which comes to an end in March. This is due to the stagnant demand for products as 2023 approaches.

That joins a long list of prominent private economists and large financial institutions whose projections for Asia's third-largest economy's economic growth have been sharply lowered.

The Ministry of Statistics made a bold prediction in its initial estimate for the upcoming fiscal year: GDP would likely rise by 7%, down from 8.7% the year before.

This was higher than the Reserve Bank of India's projection of 6.8%, which was lower than the government's previous estimate of 8% to 8.5%.

The government's growth and financial projections for the upcoming budget, which is due on February 1, are based on these estimates.

The finance minister will present the 2023 Union Budget on February 1, 2023. This will be Ms. Sitharaman's fifth consecutive budget and Prime Minister Narendra Modi's eleventh.

The budget will also be the last one that is finished before Prime Minister Narendra Modi runs for a rare third term in 2024 summer elections.

An economist at HSBC Securities and Capital Markets, Pranjul Bhandari, predicted in a note to clients that, among other things, India's exports would suffer during the fiscal year that begins on April 1, reducing the country's potential for development.

However, a representative of the International Monetary Fund (IMF) stated on Friday that India needs to expand its current strength in services exports to include manufacturing exports, which provide a large number of jobs, as it continues to be a relative "bright spot" in the global economy.

However, the Organization for Economic Co-operation and Development (OECD) stated that India is anticipated to continue having the second-fastest growing GDP among the G20 nations, behind only Saudi Arabia, despite the downgrades to India's economic outlook.

Aditi Nayar, an economist at ICRA, told Reuters, "Buoyant albeit mixed domestic consumption should help to stave off some of the pain arising from weak exports during this period."